China Railway, Angang Steel Lead Stock Gains on Stimulus Plan
China Railway Group Ltd., builder of half of the nation’s railroads, and Angang Steel Co. led gains in Shanghai and Hong Kong trading after the government said it will spend 4 trillion yuan ($586 billion) to bolster the economy.
China Railway rose 9.8 percent to 5.17 yuan in Shanghai as of 10:20 a.m. Angang Steel, the nation’s second-biggest steelmaker which makes rail steel, surged 20 percent to HK$5.94 in Hong Kong. Anhui Conch Cement Co., China’s biggest maker of the material, climbed 23 percent to HK$33.25.
The stimulus package, equivalent to almost a fifth of China’s gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site. The fund will go toward low-rent housing and infrastructure expansion of railways, roads and airports.
“Steel demand will be the first to benefit from infrastructure expansion,” Helen Lau, a Shanghai-based analyst from Daiwa Securities Group Inc. said, “We will see consumption accelerating from the second to third quarter after steelmakers deplete stockpiles.”
China’s steel production, the largest in the world, will rise at least 5 percent next year on the plan, Lau said. The broker will revise its forecast of a 5 percent drop in the 2009 output, she said.
The economic-stimulus plan presents “a lot of opportunities,” China Railway board secretary Li Tingzhu said today by phone. Tax breaks for the purchase of fixed assets including machinery will also cut costs at the Beijing-based company, he said.
China National Building Material Co., the country’s second- biggest cement maker, surged 29 percent to HK$5.20. Wuhan Iron & Steel Co., the nation’s third-biggest mill, gained 10 percent to 5.01 yuan.
Tags: material, port, Railway, steel