The Wall Street Journal-20080202-Shanghai Stumbles 1-4- As Snowfall Hurts Outlook
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Shanghai Stumbles 1.4% As Snowfall Hurts Outlook
Full Text (463 words)A WSJ News Roundup
Shares in Shanghai continued to fall Friday as investors remained concerned that the economic impact from China's snowstorms will be larger than expected.
Markets elsewhere in Asia ended mixed. Financial stocks were lifted by earlier gains on Wall Street, but Sony fell in reaction to a profit warning.
In Europe, stocks climbed amid bid speculation. Miners were the big gainers after Chinalco and Alcoa disclosed they own 12% of Rio Tinto's London-listed shares. The news came after the market had closed in Australia, where the shares also are traded.
China's Shanghai Composite, which tracks yuan-denominated Class A shares and foreign-currency Class B shares, fell 1.4% to 4320.76, its lowest close since Aug. 1 and bringing losses for the week to 9.3%. It was the largest weekly decline since May 1997. Analysts put support in coming days at the psychologically important 4000 level.
Severe weather conditions across the country, with some areas suffering their worst snowfall in more than a decade, have led to transport chaos and disrupted supplies of food and fuel. Snow and ice also have snapped power lines, leading to energy shortages.
"The market is speculating that Beijing will set a relatively lower target for 2008 gross-domestic-product growth at the National People's Congress in March due to the severe snow, which will cut earnings forecasts for listed companies," said Wang Junqing, an analyst at Guosen Securities.
More companies have said their production has been affected by the weather, which is raising concerns about first-quarter earnings. Hunan Valin Steel Tube & Wire fell 6.2% after it said it had halted some of its output lines because of a shortage of power.
Large-capitalized companies also fell, a sign that institutional investors have started to withdraw from the market ahead of the Lunar New Year holiday. PetroChina fell 3.4% and Datang International Power Generation hit the 10% downside limit.
China Coal Energy jumped 32% in its debut, but the start was deemed weak by Shanghai standards. The coal producer had raised 25.67 billion yuan ($3.57 billion) last month. Analysts had thought it could rise 49%.
The country's stock markets will be closed from Wednesday to Feb. 12 for Lunar New Year. Other markets closing for the holidays are South Korea, from Wednesday through Friday; Taiwan, from Wednesday through Monday; and Hong Kong, Singapore, Malaysia and Indonesia, on Thursday and Friday.
In TOKYO, the Nikkei Stock Average of 225 companies shed 0.7% to 13497.16. Sony tumbled 8.2% after it cut its operating-margin forecast because of the stronger yen.
In LONDON, the FTSE 100 Index gained 2.5% to 6029.20. Rio Tinto climbed 13% as investors assessed the Chinalco/Alcoa move and what it could mean for BHP Billiton, which faces a Wednesday deadline to make a formal bid for its rival or withdraw.
