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China pork and farm shares jump on trade threats
[SHANGHAI] Chinese pork and agriculture shares escaped the market downdraft from US-China trade tensions on Friday, rising sharply on anticipation that potential new barriers on American imports could fatten up the sales of domestic producers.
China, the world's largest pork producer, consumer and importer, on Friday released a hit list of US goods that could face duties of up to 25 per cent, notably pork, fresh fruit and wine.
The threatened measures are in retaliation for US President Donald Trump's signing of a new trade order that could impose duties as high as 25 per cent on Chinese goods.
Pig breeder Hunan New Wellful surged by the maximum permitted daily amount of 10 per cent to close at 5.81 yuan in Shanghai.
On China's second board in the city of Shenzhen, Guangdong Wens Foodstuff Group, one of the country's largest pig breeders, advanced 3.66 per cent to 21.54 yuan.
Such shares defied a global market rout caused by the escalating tensions and which dragged Shanghai's main index 3.39 per cent lower at the close, while Shenzhen's index fell 4.49 per cent.
"China's potential retaliatory moves mainly focus on farm products, providing a good chance for domestic producers to boost sales," said Zhang Gang, a strategist with Central China Securities.
China's Commerce Ministry warned it could impose tariffs on US pork, fresh fruit, nuts, ginseng, wine, and aluminium scrap if a negotiated agreement cannot be reached.
In Shanghai, Gansu Dunhuang Seed, a seed, cotton and food processing company, jumped 10 per cent to 7.67 yuan, while Wei Long Grape Wine rose 1.38 per cent to 16.17 yuan and Xinjiang Korla Pear gained 4.23 per cent to 15.76 yuan.
But China's Hong Kong-listed WH Group, the world's largest pork producer and which acquired major US pork and hog producer Smithfield Foods Inc five years ago, fell 5.17 per cent to HK$8.98.
Mr Zhang said the market turmoil may abate as the tit-for-tat US and Chinese moves remain tepid, aimed more at testing each other's mettle, and could result in a negotiated settlement.
Markets will be watching to see whether the fracas escalates to include bigger-ticket items like massive US sales of aircraft and soya beans to China, Zhang said.
"If China brings out soya beans or the Boeing deal, the trade war will escalate," Mr Zhang said.