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China stock market

China stocks see hefty losses during first quarter

But shipbuilding stocks enjoy strong rises on Friday, after report says China plans to merge its two biggest shipbuilders to create a behemoth that could dwarf global rivals

But shipbuilding stocks enjoy strong rises on Friday, after report says China plans to merge its two biggest shipbuilders to create a behemoth that could dwarf global rivals

PUBLISHED : Friday, 30 March, 2018, 12:54pm
UPDATED : Friday, 30 March, 2018, 9:07pm

Chinese stocks ended the first quarter of 2018 higher after the last trading day on Friday before the Easter holiday, boosted by a rally in shipbuilding stocks on a reported merger of China’s two biggest shipbuilders.

But the equity index still posted heavy losses for the entire three-month period, on concerns about a US-China trade war.

The Shanghai Composite Index inched up 0.3 per cent, or 8.365 points, to close at 3,168.89.

For the week, the index rose 0.4 per cent, breaking a two-week losing streak. But for March, it still lost 2.9 per cent, extending a 6.4 per cent plunge in the previous month. For the first quarter, it declined 4.2 per cent.

The Hong Kong stock market was closed Friday for the start of a four-day break and will reopen on Tuesday. In the January-March period, the Hang Seng Index rose 0.6 per cent, after fluctuating within a yawning range of more than 4,300 points.

“Fears about a US-China trade war have escalated in the past month,” said Wang Jianhui, an analyst at Capital Securities. “Investors have turned risk-averse, and confidence has yet to fully recover as the uncertainty remains. Trading volumes are also expected to shrink.”

Analysts expect the Chinese markets to head higher in April, however, if companies issue solid preliminary earnings results for the first quarter.

Fears about a US-China trade war have escalated in the past month. Investors have turned risk-averse, and confidence has yet to fully recover as the uncertainty remains. Trading volumes are also expected to shrink
Wang Jianhui, an analyst at Capital Securities

Shipbuilding and defence stocks pulled higher after the Chinese government was reportedly considering the merger of its two biggest shipbuilders to create a behemoth that could dwarf global rivals, such as South Korea’s Hyundai Heavy Industries and Japan’s Mitsubishi Heavy Industries.

The State Council, China’s cabinet, granted its preliminary approval to the merger of China State Shipbuilding (CSSC) and China Shipbuilding Industry, the combined revenues of which exceeded 500 billion yuan (US$80 billion), said a Bloomberg report on Friday.

Hyundai Heavy Industries, the world’s largest shipbuilder by sales, had consolidated sales revenues of US$31 billion in 2016.

CSSC shares soared by their daily limit of 10 per cent to 19.06 yuan on Friday, while China Shipbuilding surged 4 per cent to 5.43 yuan. CSSC Science & Technology also jumped 6.6 per cent to 13.37 yuan, and CSSC Offshore and Marine Engineering Company gained 6.7 per cent to 22.77 yuan.

Asian Star Anchor Chain and Bestway Marine & Energy Technology both climbed 3.8 per cent to 6.04 yuan and 7.3 yuan.

By Friday’s close, the large-cap CSI300 was up 0.1 per cent to 3,898.50. The Shenzhen Composite Index and the ChiNext Price Index gained 1.3 per cent and 3.2 per cent to 1,853.72 and 1,900.48 respectively.

Technology stocks also shone, with chip makers and computer manufacturers posting significant gains. Beijing Beetech and Ingenic Semiconductor both soared 10 per cent to 57.08 yuan and 29.49 yuan respectively. Dawning Information Industry jumped 3.2 per cent to 54.71 yuan. HC SemiTek Group gained 7.3 per cent to 19.64 yuan.

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