Shanghai and Hong Kong Stocks Surge; CNOOC Deals

Chandrasekhar Atreya
11 Oct, 2010
New York City

Stocks in Shanghai rallied the most in four months led by resource and energy stocks. CNOOC agrees to buy 2.6 million tons of natural gas from a French company and a large stake in shale gas assets in the U.S. controlled by Chesapeake.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai rallied the most in four months led by resource and energy stocks. CNOOC agrees to buy 2.6 million tons of natural gas from a French company and a large stake in shale gas assets in the U.S. controlled by Chesapeake.[/R]

Stocks in Shanghai extended their gains led by resource and energy firms on economic outlook to lead the benchmark index to its largest rally in four months. Hong Kong stocks also echoed mainland sentiments and closed higher.

The CSI 300 Index in Mainland China soared 2.91% or 88.66 points to close at 3,132.90 and Hong Kong stocks also gained as much as 1.15% or 263.13 to close at 23,207.31.

China’s Baosteel Monday lifted its profit growth forecast for the first three quarters of this year to 170% to 190% from its original 140% to 160% prediction.

Shanghai Mayor Han Zheng said Sunday at a press conference expressed his frustration and noted that it is “indisputable fact” that home prices in the city were “too high and the over speculation distorts the market.”

In addition Zheng noted, “The Shanghai government has a clear target on its housing measure, which is to steer the market back to its fundamentals.”

Emerging countries won a battle on Saturday for heightened IMF scrutiny of rich countries’ economic policies as world financial leaders sought to defuse mounting tensions over currencies.

The International Monetary Fund’s 187 members gave voice to their frustrations of emerging economies, which say the IMF has traditionally not been tough enough on its biggest shareholders, led by the United States.

Emerging economies of Asia and Latin America are demanding further action from the IMF and reining excesses in the US and Europe and align the consumption and trade flows.

Teck Resources Ltd, Canada’s largest base-metals and coal producer, said an investment by China’s sovereign wealth fund has almost tripled in value. The company plans to list in Shanghai as it expand sales in China.

China Investment Corp bought 17.2% of Teck in July 2009 for $1.5 billion, and the stake is now worth $4.3 billion, Donald Lindsay, CEO of Teck said in Shanghai today.

China said it will introduce graduated tariffs for residential use of power as part of the country’s efforts to reform energy prices. Based on volume, the graduated structure will penalize higher users with a higher rate but keep power bills basically unchanged for most households nationwide.

“To adopt a graduated power tariff policy for residents has become a key measure for many countries short of energy to address rising energy prices and curb irrational energy consumption,” the National Development and Reform Commission said Sunday.

Chinese offshore oil and gas company CNOOC agreed to buy 2.6 million tons of liquefied natural gas from French firm GDF Suez SA. The deal signed in Shanghai with CNOOC Gas & Power Group on Sunday, calls for France’s partially state-owned gas and electric company to provide LNG over four years, beginning 2013.

CNOOC Ltd will buy a stake in Chesapeake Energy Corp’s shale oil and gas acreage in the U.S. and will spend $2.16 billion over the next two years. CNOOC and Chesapeake, announced late Sunday that CNOOC will buy a 33.3% stake in its 600,000 acre Eagle Ford shale assets for an initial $1.08 billion in cash.

Under the terms of the deal, CNOOC will also fund Chesapeake’s 75% of the drilling expenses until an additional $1.08 billion has been paid.