Shares fall as Sinopec hit badly by fatal blast

Shanghai shares yesterday fell for a third straight day as heavily-weighted Sinopec posted the biggest drop in five months after a fatal pipeline explosion in Qingdao.

The Shanghai Composite Index lost 0.47 percent to 2,186.11 points.

China Petroleum and Chemical Corp, known as Sinopec, fell 4 percent — the biggest drop since June 24 — to 4.85 yuan (80 US cents) after a leaking pipeline of the country's largest oil refiner caused a deadly blast on Friday that killed at least 55 people. Shares of PetroChina Company Ltd shed 1.5 percent to 7.98 yuan.

The explosion definitely has a negative impact on Sinopec.s image and thus depresses the company's share price, CITIC Securities said in a report yesterday.

Orient Securities said the accident may lead to an overhaul of petroleum and gas pipelines and will hurt the oil sector in the short term.

Despite yesterday's decline, market watchers were optimistic over the outlook in the long run.

Catherine Yeung, investment director of Fidelity Worldwide Investment, said in Shanghai yesterday that China.s boldest reform package in three decades could be a positive catalyst for foreign investors to re-look the Chinese market.

Meanwhile, national defense-related shares surged after China declared an air defense zone over the East China Sea. CITIC Securities said in a separate report that spending on military equipment will grow rapidly in the next five to 10 years.

Jiangxi Hongdu Aviation Industry Co surged 9.6 percent to 21.60 yuan. China AVIC Electronics Co Ltd rose 6.4 percent to 24.94 yuan.