May 12, 2008

Chinese bourses suspend quake zone firms

The Associated Press

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

Despite the suspensions, share prices were lower in early trading, with the benchmark Shanghai Composite Index dropping as much as 3.3 percent in early trade. By midmorning it had regained some of the lost ground and was 1.7 percent lower at 3,564.45.

The Shanghai Stock Exchange suspended trading in 45 companies, most of them based in central China's Sichuan province, where authorities said early Tuesday that the 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 from 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.