Oil Price Rises, Energy Stocks Soared

Profile of Today’s Market:

A-share market on Friday rebounded after plunging. SSE volume saw new high in June. Country’s normal upgrade in domestic oil product and power prices. In the morning session, although the market declined to the new low after opening high because of profit-taking chip short in petroleum and chemical sector at high, under the promotion of advance in petroleum and chemical stocks and other blue chips and stocks with themes, SSE Index rebounded to 2800 and 2900. Shang Fulin, the president of CSRC expressed yesterday to consider and design development orientation in the capital market from the entire status to construct well-off society and promote national economic development. 

Key Drivers:

Stocks of securities companies soared completely. Public has a rather high expectation to their pilot trials of financing and securities loan business. Haitong Securities (600837.SH) and Northeast Securities (000686.SZ) both reach the up limit. CITIC Securities (600030.SH) jumps

over 9%. Regarding the opening-up of domestic oil price as favorable news, stocks of securities companies became the top advancers. We should consider and design the developing orientation of China’s capital market on the basis of building a moderately prosperous society in all aspects and developing national economy, says Shan Fulin, the chairman of CSRC, in Washington yesterday.  

The electricity and oil price hike has stimulated the energy section represented by electricity stocks boost. Sichuan Minjiang Hydro Power, Sichuan Xichang Electric Power, Sichuan Mingxing Electric Power and Shenzhen Nanshan Power Station hit daily limit. The sales power price upgrade by NDRC is the substantial bullish to the electricity listed companies, especially those power plants and grids with network and factories. In addition, it is pointed out by NDRC that in order to prevent the rise of gas and electricity prices, there will be temporary price intervene to state electric power production coal since now to Dec 31, 2008. During this period, the coal ex-mine price for electricity production is not allowed to over the actual settlement price on June 19, 2008.

Stimulated by the news of raising oil prices, China Petroleum & Chemical and Petro China open high today. The former increases 2.07% while the latter surges 4.55%. Certain institution estimates that this policy will raise 2008 EPS of the above two companies by 0.37 Yuan and 0.165 Yuan respectively.

The new energy sector shows large advancer. Wind power stocks and solar power stocks lead the increase. 20 individual stocks of this sector skyrocket to upper limit and thus the sector soars by 7% on average. The opening of domestic finished oil products’ prices means that the new energy companies’ earnings will grow up rapidly. Xiangtan Electric Manufacturing rises to upper limit. The new energy, of which, hydrogen is the core factor, will be further popularized during the high oil price period. It will become the new power of new energy industry. The rising oil prices will make the substitute energy market become broader, which includes carbinol, ethanol and DME. The related leading companies will benefit.

The uprising large blue chips had stabilized the market. Many sectors were performed actively, such as new energy, financial, utility, energy-saving and environmental-protection, Olympic Games sector, etc. But some went sluggish, including chemical, non-ferrous metal, software development, biology pharmaceutical, agricultural, military industry, land, etc. For today’s decliners, cement, textile, airlines and auto sectors lost largely. Led by Petro China (601857.SH) and China Petroleum & Chemical (600028.SH), China indices opened higher today. Then they moved downwards and touched new low because of the profit-taking pressure. However they recovered the loss and started to move ahead in the afternoon session pushed by blue chips and some stocks with hot concepts. Shanghai Composite Index broke through 5 Day MA and closed upon 2800 points.

相关研究报告下载:

chinaafternooncommentary20080620-shanghai securiti (27.54 KB)