Money

Anti-radiation-related A shares get a boost

By Li Xiang (China Daily)
Updated: 2011-03-17 13:47

BEIJING - Investor concerns about Japan's radiation leak has prompted a rally in stocks of companies with a connection to anti-radiation products on China's A-share market.

However, analysts said the surge was mainly driven by short-term speculative trading and the positive impact on related companies will be "very limited".

Share prices of Jihua Group Corp Ltd, a manufacturer of radiation-proof uniforms and footwear, jumped by 7.26 percent on Wednesday after hitting the 10 percent daily trading limit on the previous trading day.

Drug companies such as Merro Pharmaceutical Co Ltd, a producer of anti-radiation pills, also enjoyed a boost in their share prices as speculative investors bet on quick returns from the rally.

"The price surge of companies related to the anti-radiation industry is just another classic example of speculation on the A-share market," said Zhang Qi, a Shanghai-based analyst at Haitong Securities.

"The speculative sentiment pushed up share prices in the short term but the positive effect is very limited as we don't think it will change the fundamentals of those companies," Zhang said.

Meanwhile, the Japanese nuclear crisis also triggered a sell-off of nuclear power-related shares in China as the disaster sparked international concerns about the safety of nuclear power plants.

Related readings:  China freezes nuke plants approvals  Radiation not strong enough to pose huge health risk  China stocks close higher Wednesday  Japan's nuclear morality tale

The share price of Dongfang Electric Corp, a Chinese manufacturer of nuclear power-related products, has declined 11 percent since the devastating earthquake and tsunami hit Japan on Friday.

"The Japanese earthquake will no doubt have a major global impact on the perception of nuclear power," Deutsche Bank AG said in a report. "More importantly, it may delay the nuclear growth plans of China, India, Japan and South Korea."

"We think governments around the world will take a more cautious attitude toward their nuclear power development plans and it's highly likely that the development will slow down," said Zhang Shuai, an analyst at Guojin Securities.

But Sun Qin, president of China National Nuclear Corp, the nation's largest atomic plant operator said on Monday that the Japanese power plant crisis won't have a serious impact on China's nuclear industry and it won't alter the country's long-term development plans.

The Japanese nuclear crisis has also helped lift shares of manufacturers of solar power and wind energy equipment as investors bet that the government will push forward the development of other clean energy sectors.

"Other alternative energy sectors will certainly get a boost at least in the short term while concerns and questions about the safety of nuclear power remain," Zhang said.

The benchmark Shanghai Composite Index rebounded by 1.19 percent to close at 2930.8 point after it fell to the lowest level in three weeks on Tuesday.