Sinopec Jumps on Private Investment Plan: China Overnight

China Petroleum & Chemical Corp. rallied the most since May 2009, leading gains among the nation’s stocks in New York, after Asia’s biggest oil refiner said it’s seeking private investors for its oil unit.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. added 0.7 percent to a four-week high of 102.52 yesterday. American depositary receipts of China Petroleum (386), known as Sinopec, jumped 8.4 percent to trade at the highest premium over its Hong Kong shares since January 2009. PetroChina Co., the nation’s biggest oil producer, climbed 1.7 percent, while 21Vianet Group Inc. (VNET) advanced to a record.

Beijing-based Sinopec, which operates the nation’s largest network of fuel stations, plans to sell as much as 30 percent of its oil retail unit to private investors, it said in a statement yesterday. Sinopec is welcoming investors after China unveiled in November the biggest package of reforms since the 1990s, including the promise to encourage more private investment in state-controlled industries.

“It’s viewed as value creative for Sinopec,” Tony Hann, the head of emerging-market equities at Blackfriars Asset Management Ltd. said by phone from London yesterday. “It’s an indication authorities are going to deliver on their promise to make these state-owned enterprises more market-oriented.”

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., rose 0.5 percent in a fourth day of gains to $35.98.

Trading Volume

Sinopec’s ADRs surged to $83.51 in New York, the highest level in two months. Trading volume on the ADRs was 6.2 times the 90-day average compiled by Bloomberg. Each ADR represents 100 underlying shares in the company.

Sinopec’s unit that markets and distributes petroleum products was its biggest contributor to sales in 2012, with 71 percent, according to data compiled by Bloomberg. The company operated 30,532 fuel stations across China as of the end of 2013, it said in an e-mailed statement.

PetroChina climbed to $103.54, the highest since Jan. 22.

“This is probably the first of several such announcements one can expect as the government really pushes this reform of state-owned enterprises through,” Brendan Ahern, New York-based managing director of Krane Fund Advisers LLC, which manages a Kraneshares ETF that tracks Hong Kong-traded companies, said yesterday.

U.S. Listing

21Vianet Group, China’s largest independent Internet data-center operator, climbed 1.4 percent to $25.92, the highest price since its U.S. listing in April 2011. Home Inns & Hotels Management Inc. (HMIN), China’s biggest budget hotel chain operator, gained 3.1 percent to a four-week high of $38.65.

Youku Tudou Inc. (YOKU), owner of the biggest video websites in China, slid 2.4 percent to $31.22, dropping the most in two weeks. Maxim Group LLC cut the recommendation on Youku to sell from hold yesterday, saying intensified market competition may prevent it from adding customers.

The Shanghai Composite Index added 1.1 percent to a two-month high of 2,142.55, while the Hang Seng China Enterprises Index (HSCEI) in Hong Kong was little changed at 10,057.52. The S&P 500 slipped 0.7 percent as the International Monetary Fund warned of risks to global growth and Federal Reserve indicated stimulus cuts will likely continue.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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