May 12, 2008

Chinese bourses suspend quake zone firms

By ELAINE KURTENBACH

The Associated Press

Chinese shares fell Tuesday and the country's two stock exchanges suspended trading in 66 companies based in the region hit by a major earthquake in an effort to minimize potential disruptions to financial markets.

The benchmark Shanghai Composite Index was down 2.6 percent at 3,533.55 by midday, after dropping as much as 3.3 percent in early trade. The Shenzhen Composite Index, of China's second, smaller bourse, fell 1.3 percent by midday to 1,097.26.

The Shanghai Stock Exchange suspended trading in 45 companies, most of them based in central China's Sichuan province, where authorities said Monday's 7.9 magnitude quake had killed nearly 10,000 people.

The full extent of damage from the disaster, especially in remote mountainous areas, was still unclear. But at least two chemical plants were reported among the many structures that had collapsed.

A statement posted on the Shanghai Stock Exchange's Web site listed 45 companies based in Sichuan and adjacent Chongqing municipality, one of China's biggest industrial centers, whose shares would be suspended from trading Tuesday because the bourse was unable to contact them.

China's smaller market, the Shenzhen Stock Exchange, said it was suspending trading in another 21 companies because it could not guarantee investors fair access to information about their status.

Many of the companies suspended from trading are power generators, metals and construction companies.

Although Sichuan is far inland, past policies aimed at promoting industrialization far from coastal areas mean the region is a major manufacturing as well as agricultural area.

Several mainland-based companies suspended their shares from trading on the Hong Kong Stock Exchange on Tuesday. They included Maoye International, a department store operator with outlets in Chongqing and the Sichuan capital, Chengdu, and Honghua, a Chengdu-based oil rig manufacturer.

In Tokyo, shares in bulldozer and other heavy equipment makers rose on expectations of higher demand due to the cleanup and rebuilding from the quake. Komatsu Ltd. rose 3.2 percent to 3,200 yen ($30.85), Hitachi Construction Machinery Co. jumped 4.6 percent to 3,400 yen ($32.78) and Tadano Ltd. climbed 1.9 percent to 1,037 yen ($10).