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Asian Commodities Stocks Dive on China's Plan to Rein In Prices

   By Clarence Leong 
 

Shares of Chinese miners and other Asian commodities companies slid sharply after Beijing signaled its intent to tame surging commodity prices and traders moved to cash in on outsized gains made earlier this year.

Yanzhou Coal Mining Co.'s H-shares were down 8.7% at HK$9.59 in afternoon trade on Thursday, while China Coal Energy Co. was off by more than 11% at HK$4.30. Gold miner Zijin Mining Group Co. lost 5.9% and Aluminum Corp. of China Ltd. retreated 7.1%.

South Korean steelmaker Posco closed 5.3% lower.

All five of the companies' shares had strong runs so far this year as post-lockdown recoveries in major markets sent prices of a wide range of materials soaring.

Thursday's stock declines mirrored movements in commodities futures markets. Benchmark coking-coal futures on the Dalian Commodity Exchange plunged by the daily limit of 8.0% in morning trade, while the most-traded iron-ore futures contract was last down about 5.7%. The ANZ China Commodity Index ended 1.3% lower Wednesday, with industrial metals leading the losses and copper falling especially sharply.

The moves followed local Chinese media reports on Wednesday saying that China's cabinet has pledged to take steps to ensure sufficient supply of commodities and stable prices, calling the recent rallies "unreasonable."

The renewed calls from Beijing seem to have triggered profit-taking in high-flying commodities shares, UOB Kay Hian analyst Sandra Huang said.

Ms. Huang noted that despite their outperformances this year, Chinese coal miners' valuations still look cheap based on their price-to-book ratios. Yanzhou Coal and China Coal have risen 54% and 85%, respectively, in the year to date.

 

Write to Clarence Leong at clarence.leong@wsj.com

 

(END) Dow Jones Newswires

May 20, 2021 04:13 ET (08:13 GMT)

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