China’s Stock-Index Futures Decline as Sinopec May Retreat

 China’s stock-index futures fell after the benchmark index retreated for a third day.

Futures on the CSI 300 Index  expiring in December lost 0.2 percent to 2,390.20 as of 9:18 a.m. local time. China Petroleum & Chemical Corp. , known as Sinopec, may decline after seven people from the refiner were detained after a pipeline explosion. Guangxi-based stocks including Guangxi Wuzhou Zhongheng Group Co.  and Guangxi Fenglin Wood Industry Group Co. may move after the China Securities Journal said the province’s Dongxing city may be allowed to set up a free-trade zone.

The Shanghai Composite Index  dropped 0.5 percent to 2,186.12 yesterday. The CSI 300 Index slid 0.4 percent to 2,388.63. The Hang Seng China Enterprises Index  retreated 0.5 percent. The Bloomberg China-US Equity Index fell 1.4 percent.

The Shanghai Composite is down 3.7 percent this year and trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.3, according to data compiled by Bloomberg.

Sinopec, Asia’s biggest oil refiner, may be active. Seven people from the company and two local officials were detained by police after the Nov. 22 explosion in Qingdao, the city’s Huangdao district government said in a posting on its official microblog yesterday. The explosion at the pipeline operated by Sinopec killed 55 people.

Sinopec won’t see any major negative earnings per-share impact from the incident, according to Daiwa Securities Group Inc. While the utilisation rate of Sinopec’s refinery may decline in the near to medium term, the company should have enough refined products stored in its various tank farms to ensure that sales will not be disrupted, Daiwa Securities analysts Adrian Loh and Benjamin Lim wrote in a note dated yesterday. They have a hold rating on the company’s Hong Kong-traded shares.

(Source: Bloomberg)