Rainstorms stir ripples in Chinese stock market
Updated: 2012-07-25 13:34
BEIJING -- Widespread rainstorms over the weekend have not only wrecked havoc in many parts of China, causing deaths and economic losses, but also stirred ripples in the sluggish stock market.
Chinese stocks opened lower Tuesday, with the benchmark Shanghai Composite Index edging down 0.42 percent and the Shenzhen Component Index dipping 0.57 percent after Monday's slumps.
Insurance companies suffered an overall retreat, as worries loomed over the tremendous compensation after the deaths and property losses.
An initial calculation by the Beijing Water Authority showed that Beijing's rainstorm and flooding might cause economic losses of up to 10 billion yuan ($1.59 billion). Industry watchers said this would not bode well for insurance shares on the Hong Kong Stock Exchange which also saw slumps on Monday.
Hong Kong-listed China Pacific Insurance plummeted 10.04 percent on news that private equity firm Carlyle Group is raising up to $737 million by selling 220 million shares.
New China Life Insurance Co Ltd registered a plunge of 7.38 percent, followed by China Life of 4.76 percent and Ping An Insurance of 4.41 percent.
As of midnight Monday, insurance companies in Beijing have received more than 27,000 claims for automobile damages, with an estimated economic loss of 220 million yuan, according to statistics from the Beijing Bureau of the China Insurance Regulatory Commission.
Torrential rain since Friday has ravaged China's 17 provincial areas, leaving 95 dead and another 45 missing as of Monday afternoon, according to the Ministry of Civil Affairs.
The downpours have also affected about 6.23 million people in 264 counties and forced the evacuation of about 567,000 people, the ministry said in a statement. Rainstorms also destroyed 29,000 houses and damaged another 55,000.
In Beijing alone, 37 deaths had been reported as of Tuesday, several villages in the Fangshan district were flooded and tens of thousands of automobiles had been thoroughly soaked or submerged in water.
The natural disaster, however, brought investment chances for other stocks such as those related to water facilities.
Seventeen out of 20 shares in the irrigation and construction board surged on Monday.
Shares of Zhejiang Dragon Pipe Industry Co Ltd, a leading concrete pipe manufacturer, surged 9.97 percent on Monday, followed by Zhejiang Leo Co Ltd, China's largest manufacturer of small pumps and garden machines, which witnessed a hike of 9.94 percent.
Industry observers predicted that the irrigation and water facilities board will keep the rising momentum in short term as the country is still in a flood season.
Bolstered by the nation's 12th Five-Year Plan for National Economic and Social Development (2011-15), the sector might enter a period of stable growth, experts say.