China stocks rise 2.3 pct, led by oil refiners
Chinese stocks rebounded on Wednesday, led by oil refiners on hopes that the introduction of a fuel tax in China would lead to higher gasoline prices and improve their refining margins.
Sinopec (600028.SS: Quote, Profile, Research, Stock Buzz), the biggest refiner, surged 8.67 percent to 8.27 yuan in heavy trade and PetroChina (601857.SS: Quote, Profile, Research, Stock Buzz) gained 5.32 percent to 11.67 yuan after the China Daily quoted the head of the National Development and Reform Commission’s Energy Research Institute as saying the long-awaited fuel tax would be imposed “very soon.”
Details of the tax and exactly how it would affect refiners’ earnings remain unclear, but analysts said investors were betting that the net result would be positive. The oil refiners are heavily weighted in market indexes, and their weak earnings in the past year have helped to drag down the entire market.
“Once imposed, the fuel tax could eliminate the root cause of losses for refineries such as Sinopec and Petrochina,” said Cao Xuefeng, senior stock analyst at West China Securities.
“Investors expect a recovery of earnings at the two giants, which used to account for 20 percent of the total profits of China’s listed companies. This would greatly improve the prospects for corporate earnings next year.”
The Shanghai Composite Index .SSEC, which had tumbled 6.31 percent on Tuesday, rebounded 2.26 percent to stand at 1,945.492 points at midday on Wednesday.
Gaining stocks outnumbered losers by 698 to 220, while tunrover in Shanghai A shares was fairly active at 35.6 billion yuan ($5.2 billion), though it shrank from Tuesday’s very high levels.
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