A multi-billion dollar merger among China state-owned shipping groups has brought turmoil and losses to the Hong Kong market this morning.
China Ocean Shipping, or Cosco, said on Friday it would merge its operations with China Shipping and then split them into four entities, containing the assets of each for containers, oil and gas transportation, financing and ports.
The companies involved had their shares suspended from trading in mid-August when talks about a deal got underway. Here are shareholder reactions after an hour of trade:
* China Cosco Holding (ticker code: 1919) fell 20.9 per cent.
* Cosco Pacific (1199) fell 20.8 per cent.
* China Shipping Development (1138) lost 10 per cent of its value at the open, then surged to be up as much as 11.3 per cent. At pixel time it’s up less than 3 per cent.
* China Shipping Container Lines (2866): fell 25.7 per cent.
The FT’s Jennifer Hughes noted over the weekend that the deal comes as the industry struggles to cope with the weak demand and overcapacity that has dogged container shipping since the financial crisis.
A merger document sent to China Shipping shareholders said: “The leading shipping SOEs are required to focus on becoming large, strong, and outstanding groups . . . with international competitive edges, thereby providing support and guarantee for the economic globalisation of China.”
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