Energy Shares Surge in Hong Kong on Pipeline Sale, Fuel Price

  • Sinopec, PetroChina among biggest gainers on benchmark
  • Shanghai Composite declines to lowest in more than a month

China’s two largest energy companies were among the dominant shares in Hong Kong on Wednesday, outpacing the broader market amid reports of a fuel price increase and news of a pipeline sale.

The Hang Seng Index ended little changed at 22,456.62. Sinopec surged after it said it is selling a 50 percent stake in a pipeline unit for 22.8 billion yuan ($3.3 billion) as it seeks funds to expand its natural gas business. PetroChina Co. closed at its highest level since November last year after SC199.com reported that China will raise gasoline and diesel prices from Thursday. The Shanghai Composite Index fell to a five-week low.

The Sinopec news points to “an acceleration of reform within the sector,” said Neil Beveridge, a senior analyst at Sanford C. Bernstein in Hong Kong. “Chinese oil and gas majors have lagged international peers this year on negative sentiment toward the China market.”

Investors are awaiting for the U.S. Federal Reserve to set its policy on Wednesday, with the odds of a Federal Reserve interest-rate increase Wednesday at 100 percent. The city’s currency peg to the greenback ensures that its borrowing costs follow that of the U.S. The city’s funding costs climbed to their highest since December 2008. A gauge of energy companies advanced 1.6 percent on the Hang Seng Composite Index.

  • China Petroleum and Chemical Corp., known as Sinopec, climbed 3.4%; the company is considering an initial public offering of its retail business, according to people familiar with the matter
  • PetroChina rose 4.5%; Credit Suisse Group AG raised its rating and boosted its target price to HK$6.30 from HK$3.80. Kunlun Energy Co. advanced 1.7%
  • Among other companies leading gains on the HSI, Li & Fung Ltd. rose 6.3% and AAC Technologies Holdings Inc. added 3%
  • CSG Holding Co., owned by Baoneng Group’s Foresea Life Insurance Co., slid 0.7% in Shenzhen; China Vanke Co., often a target of buying by insurers, lost 3.3%; China Insurance Regulatory Commission Chairman Xiang Junbo has questioned recent aggressive investments by insurers, ranging from buying sizable stakes in listed companies to speculating in stocks with dramatic swings, according to a statement on the regulator’s website
  • A measure of property companies fell the most among industry groups in Shanghai, sliding 2.1%. China State Construction Engineering Corp., dropped 5.4%, while Nanjing Chixia Development Co. retreated 4.3%
  • Liuzhou Iron & Steel Co. tumbled by the daily limit of 10%, falling most on the Shanghai measure; Angang Steel Co. retreated 7.9%, and Baoshan Iron & Steel Co. lost 4.5%; steel rebar fell 3.7% on the Shanghai Futures Exchange 
  • The Shenzhen Composite Index fell 0.8% to its lowest close since Aug. 11, while the ChiNext gauge of small-cap shares retreated 1.1% to a nine-month low
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