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Lai See

Shrewdness always in play even during a disaster

While the economic fallout from Monday's 7.9 magnitude earthquake in Sichuan province has yet to be assessed, it did send some tremors through the stock markets yesterday.

Shrewd if not callous investors in Shanghai and Hong Kong wasted no time in buying up shares in companies expected to profit from the disaster and relief efforts, while selling down stocks likely to be hurt by the disruption.

Mainland-listed drug makers Shanghai No1 Pharmacy and Yunnan Baiyao Group both rose their 10 per cent daily trading limit on the expected surge in demand for medical supplies in the quake-hit regions.

Anhui Conch Cement and Huaxin Cement rose on expectation that large-scale (and probably state-funded) reconstruction of damaged and destroyed buildings near the epicentre will lead to increased demand for building materials.

Trading in shares of insurers was mixed.

Reuters quoted China Life Insurance president Wang Feng as saying insurance claims from the earthquake would far surpass those from the snowstorms that locked down large swathes of the mainland earlier this year and caused 151.65 billion yuan (HK$169.45 billion) in damage.

But shares in China Life and Ping An Insurance (Group) both rose in Hong Kong yesterday, after analysts reckoned their profit from premiums should be more than enough to offset claims from the quake.

Less lucky was PICC Property and Casualty, which analysts expect will bear the brunt of insurance claims following the widespread structural damage caused by the disaster. The company's shares closed down 3.18 per cent in Hong Kong. PICC said in an announcement to the stock exchange that it was 'not aware of any reasons for such decrease'.

Taking stock of quake

A total of 66 companies based in Sichuan and Chongqing and listed on mainland exchanges had trading in their shares suspended, pending notification of the impact of the earthquake on operations.

In Hong Kong, Lai See counted fewer than 10 companies with operations in affected areas, whose shares were suspended.

Several locally listed firms issued updates. Irico Group Enterprises, which is based in Xianyang, Shaanxi province, said its operations had not been affected and it experienced 'only a slight tremor' at its premises.

After the State Administration of Work Safety ordered a halt to operations at coal mines in affected areas, Hidili Industry International Development issued a statement that its coal mines in Panzhihua, Sichuan province, were about 850km away from the affected area and 'all business operations and production of the company and its subsidiaries will continue as usual'.

Taiwanese-owned rice-cracker manufacturer Want Want China Holdings said four of its plants in Chengdu had temporarily suspended operations pending safety inspections.

The Chengdu plants were expected to reopen within a week, while the firm's three other Sichuan facilities were unaffected.

Corporates to the rescue

The race is on for corporates to show their commitment to society.

China Reinsurance Group, the private state-owned company that underwrites the mainland's biggest domestic insurers, pledged to donate 3 million yuan to the China Red Cross for earthquake relief efforts.

Always among the first to fulfil 'corporate responsibility', Li Ka-shing made two donations. A sum of HK$5 million is given in the name of Cheung Kong (Holdings) and Hutchison Whampoa. But a much larger amount - 30 million yuan - will come from the Li Ka Shing Foundation.

Apparently to restore goodwill, French retailer Carrefour, whose mainland stores recently became the target of anti-France demonstrations and boycotts, said it would donate 2 million yuan. It also ordered its five outlets in Chengdu to send tents and blankets to affected areas.

Hong Kong-listed state-owned banks do not want to be left out either.

China Construction Bank Corp is sending relief in the form of 20 million yuan.

Bank of Communications pledged 12 million yuan, while Bank of China (Hong Kong) earmarked HK$3 million.

China Life Insurance will give 16 million yuan.

The Macau government said it would donate 100 million yuan to the relief effort, while the quasi-governmental Macao Foundation would contribute 10 million yuan.

Ben Kwok is on holiday

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