Metal trader surges on Baosteel rumor Shares of metal trader...

Metal trader surges on Baosteel rumor

Shares of metal trader Shanghai Merchants Holdings (1104) jumped more than 17 percent Tuesday on market speculation the Hong Kong-based company has lured China's largest steelmaker, Baosteel Group, to become its new strategic investor.

Yvonne Lee and Fulton Mak

Wednesday, January 24, 2007

Shares of metal trader Shanghai Merchants Holdings (1104) jumped more than 17 percent Tuesday on market speculation the Hong Kong-based company has lured China's largest steelmaker, Baosteel Group, to become its new strategic investor.
Shanghai Merchants, in which another steel giant, Shougang Steel, owns a 23.83 percent stake, won shareholders' approval January 4 to sell 800 million new shares at 30 HK cents each to an unknown buyer.

Market watchers speculate the buyer is Baosteel, with Shanghai Merchants becoming Baosteel's overseas investment flagship after the deal. Shanghai Merchants declined to comment on the rumor.

"I have no idea who the buyer of the new shares is," executive director Lau Yau-cheung told The Standard.

Shanghai Merchants' shares closed Tuesday at a six-year high of HK$0.42, up 16.7 percent.

Starting Thursday, the company will trade under a new name- APAC Resources -to reflect its new strategy of focusing on the metal resources business.

Earlier this month, the company also received shareholders' approval to buy 8.79 percent stake in Australian-listed iron-ore producer, Mount Gibson Iron, for HK$244 million through a rights issue and share placement.

Meanwhile, China Merchants China Direct Investments (0133), an investor in mainland financial firms, is seeking to raise up to HK$244.8 million through a top up placement of 12 million shares, according to a term sheet provided to a fund manager.

The placing price is between HK$18.40 and HK$20.40 apiece, representing a discount of 4.67 percent to 14.02 percent from the stock's Monday closing price of HK$21.40.

BOC International is handling the deal.