China's State Council vowed “fundamental change'' to quality control after 22 companies were found to have sold products contaminated with the industrial chemical melamine, which killed three children and sickening more than 1,300. In the wake of the scandal, the government fired officials, ordered recalls and said food makers will undergo mandatory checks.
Melamine can be used to disguise diluted milk because it can make protein levels appear higher.
Airlines were also among stocks to get battered this morning after oil prices shot up US$6 a barrel yesterday due to fears of a spreading crisis in the US financial sector that sent skittish investors scrambling out of stocks and into hard assets.
Air China, the nation’s biggest carrier by market value, lost 8.74 percent to 4.70 yuan. China Southern Airlines, the largest by fleet size, declined the daily cap of 10 percent to 3.05 yuan while China Eastern, the third largest by fleet size, also retreated 10 percent to 3.65 yuan.
Light, sweet crude for October delivery rose US$6.01, or 6.59 percent, to settle at US$97.16 a barrel on the New York Mercantile Exchange. Prices tumbled more than US$5 to close at US$91.15 on Tuesday. In London, November Brent crude increased US$5.62 to settle at US$94.84 a barrel.
Bucking the downward trend, some gold producers surged the 10 percent limit yesterday after bullion had its biggest gain since 1982.
Zijin Mining, the country’s biggest gold producer, jumped 3.95 percent to 3.95 yuan. Zhongjin Gold hiked 10 percent to 26.42 yuan while Shandong Gold also climbed the daily cap of 10 percent to 30.69 yuan.
Gold for December delivery rose as much as US$90.40, or 11.6 percent, to US$870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping US$70 to settle at US$850.50 in the regular session. That was the biggest one-day price jump ever – the biggest previous single-day record was a US$64 gain on January 29, 1980. In percentage terms, it was gold's largest one-day advance since 1999.
The huge rally came after the government moved overnight to rescue troubled insurer American International Group Inc with an US$85 million bailout loan. The Federal Reserve stepped in after AIG, teetering on collapse from losses tied to the subprime crisis and the credit crisis, failed to find adequate capital in the private sector.
(Shanghai Daily September 18, 2008)
