Shares of pork producer WH Group pounded
A customer inspects pork products at a supermarket in Taipei, Taiwan, Nov. 17, 2018. EPA-EFE/DAVID CHANG
By Steven Russolillo and Lucy Craymer
Hong Kong, May 7 (efe-epa).- A company sometimes considered a proxy for United States-China trade tensions just suffered one of its worst trading days on record, according to a Dow Jones Newswires report made available to EFE on Tuesday.
Hong Kong-listed shares of WH Group Ltd., the world's largest pork producer, sank as much as 12 percent on Monday after a pair of tweets from President Trump escalated the trade rhetoric between Washington and China.
The stock ended Monday 6.8 percent lower, among its biggest drops since going public five years ago, and more than double the 2.9 percent fall in the broader Hang Seng Index.
WH's business model makes it especially vulnerable to trade tensions. The Chinese company bought US firm Smithfield Foods for $4.9 billion in 2013, a deal that allowed it to export pork carcasses and meat products from the US to China. WH makes nearly all of its money in those two countries. It farms and slaughters pigs, and sells fresh pork and packaged meat.
After President Trump tweeted last year that trade wars were "easy to win," WH's shares began a seven-month slide that cost them nearly half their value. It ended in November when Mr. Trump had what he called "a very good conversation" with Chinese President Xi Jinping that signaled progress in the trade dispute.
China's tariffs on US pork climbed as high as 70 percent last year, making pork from Europe and South America more competitive and allowing producers there to gain market share in China.
WH wasn't immediately available for comment, Dow Jones added in a report made available to EFE.
This year, WH shares have recovered: Last month, they were up as much as 59 percent for 2019. Investors saw the company benefiting not just from apparently easing trade tensions but from a looming shortfall in Chinese pork production due to the spread of African swine fever in China. The Chinese government in April forecast pork prices in China would rise 70 percent from a year earlier.
Mainland investors have piled in. In April, WH was the most actively purchased stock through trading links connecting mainland Chinese investors to Hong Kong-listed stocks, according to an analysis by BNP Paribas.
Following the outbreak of African swine fever, analysts had expected WH to be less affected than smaller rivals in China, as stricter biosecurity at its farms and slaughterhouses would make WH's pigs less likely to contract the disease.
Seeing early signs that Chinese pork buyers were re-entering the US market, they also believed WH's American operations would benefit from rising pork prices there.
WH isn't the only stock susceptible to trade tensions. In China, several export-oriented companies, including port operators, contributed to steep declines on Monday.
The Shanghai Composite fell 5.6 percent, its worst single-day drop since February 2016.