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Chinese cement stocks up on stimulus package

Last updated: 22:44 24 Nov 2008 AEDT, First published: 23:44 24 Nov 2008 AEDT

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Weekend reports of Beijing's rush to sign up RMB100 billion's worth of infrastructure projects for its stimulus plan in just ten days, and for the money to have been spent within 50 days, made for interesting reading and also helped lift cement stocks. In Hong Kong, China National Building Materials lifted 8.8 percent and Shanshui Cement 10 percent.
 
Markets down after interest-rate cut not announced


However the Chinese markets were down in general after an expected interest rate cut was not announced over the weekend bringing the Shanghai Composite Index down 72.3 points, or 3.7 percent. Hong Kong was down 1.6 percent amid reports about a rescue plan for Citigroup and a US$3 billion capital-raising plan by Standard Chartered. Airlines took a hit with Air China falling 10.1 percent, China Eastern Airlines 15.2 percent and China Southern Airlines diving 13.6 percent.

The nuclear option

 
News of the first nuclear power plant to get into the saddle after the government announced its huge stimulus package was released. Shanghai-listed Dongfang Electric (600875,SH), the new nuclear power plant's supplier for electic generating set and steamer, saw its stock price surged 30 percent in the last fortnight and 8 percent in the past two trading days. The project, in Fujian province, will require an investment of an estimated 100 billion yuan (US$14.6 billion) for six sets of million kilowatt units. Two units are to be in operation in 2013 and 2014 for the first phase of the project. A total of 20 new nuclear power plants are expected in the coming 11 years.

Coal prices expected to drop further as power and steel slow down

Electricity production has started to decrease in China, with October dropping 4 percent from last October and 17 percent from this July. With 84 percent of China's electricity generated by coal, and 51 percent of China's coal going to electricity production, coal prices are now expected to fall even more. The steel industry is the second largest consumer of coal and an important consumer of electricity. According to China Iron and Steel Association, the whole steel industry has been in the red since last month started and more than 40 percent of small- and medium-sized steel companies in Hebei and Henan provinces have shut down. Baosteel, Shougang and Angang last month cut their production by 20 percent.

In other hot news

Shares of Gome Electrical Appliances were suspended from trading as billionaire Chairman Huang Guangyu, China's second-richest man, was detained by police.

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