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Market Savvy | SAVVY CONFIDENTIAL / A Briefing for
Investors

Chinese Markets Rally on Trade News, but Issues Tumble in U.S.

May 26, 2000|Times Staff, Bloomberg News

Chinese investors took a very different view Thursday of normalized U.S.-China trade relations than did U.S. investors.

China's main domestic stock indexes rose to record highs as local investors snapped up shares after the U.S. House voted late Wednesday afternoon to grant China permanent normal trade status.

But shares of many Chinese companies trading on U.S. markets tumbled Thursday, reflecting expectations that many of the companies will have a tough time competing as Chinese markets are opened to new competition.

In Shanghai, the class-A share index, which tracks shares available only to domestic investors, rose 1.4% to a record high of 2,000.08. The Shenzhen A-share index gained 1.3% to 624.80, also a record.

But in U.S. trading, investors pushed Chinadotcom (ticker symbol: CHINA), a Hong Kong-based Internet services provider, down $2.50 to $24.50. Late Wednesday, the stock was trading as high as $31.25 in after-hours activity.

Among other Chinese shares trading in U.S. markets, China Tire (TIR) sank 56 cents to $6, China East Airlines (CEA) fell $1 to $10.75, Yanzhou Coal (YZC) fell 81 cents to $10.50 and holding company China Prosperity (CPIH) slumped $3 to $6.50.

In Hong Kong, meanwhile, the Hang Seng index eased 0.1%.

Some analysts said the buying by Chinese investors had more to do with expectations that the government ultimately will merge its locals-only markets with the markets now available only to foreigners--giving locals a "hard currency" market in which to trade.

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