Stocks in Hong Kong-listed utilities companies are soaring on the back of the rapid expansion of China抯 gas network. The country plans to spend more than US$7 billion on gas pipelines and city networks in the next five years and hopes to quadruple its use of natural gas to 8% of household fuel by 2010.
Shares of Xinao Gas Holdings, Hong Kong抯 top-performing utility stock, have surged 116% this year. Wellington Management, Capital Group and JP Morgan Chase are among companies that invested in Xinao and other Hong Kong-traded mainland gas suppliers in 2003. Xinao holds rights to distribute gas in 39 Chinese cities and said it is in talks with 20 more.
The central government has said it wants to reduce pollution by replacing part of the nation抯 coal consumption with natural gas and renewable energy. But provincial governments want to keep as many coalmines as possible open without having to invest in clean coal technology, in an attempt to maintain local employment and revenue and keep costs down.