2010-07-27

Protectionism continues

Just because it isn't front page news doesn't mean it isn't happening.

Zhongwang shares in danger of collapse
Shares in embattled aluminium extruder China Zhongwang Holdings could dive to just HK$3 because of a United States anti-dumping attack on its industry, a top investment bank has claimed.
Zhongwang, which has been fighting claims about the accuracy of its accounts since shortly after its HK$7 a share initial public offering in May last year, now faced losing business because US politicians might impose punitive import taxes on its American customers that would stop them buying from China, Morgan Stanley said.

The US International Trade Commission (ITC) said last month American companies were being damaged by the low cost of Chinese extruded aluminium, which is used in products from door frames to solar panels.

Morgan Stanley analysts Charles Spencer and Mean Phil Chong said in a research note that Zhongwang's profits could collapse if the price of the metal falls to 6,000 yuan (HK$6,863) per tonne by 2015 from more than 15,000 yuan currently, not least because the Liaoning firm was also facing increased competition from Aluminum Corp of China (SEHK: 2600).
There's a lot more to the story though, as some say the firm inflated its U.S. sales figures.

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