Pollution spike boosts shares

The recent surge in air-pollution levels in more than 30 cities around China may boost demand for environmental and air-filtering products and spur the performances of the companies in those industries, analysts and investors said.

The healthcare sub-index of China's A-share market gained 2.8 percent on Monday as consumers are increasingly looking at products to protect themselves against rising levels of PM2.5 - particles in the air smaller than 2.5 microns and able to enter the lungs - especially in North China.

A-shares are specialized shares bought and traded on the Shenzhen and Shanghai stock exchanges.

Energy shares were also supported as investors believe that tighter policies against air pollution will be introduced soon. Those policies are expected to strengthen regulations to curb the deterioration of air quality and benefit major listed energy companies.

China Shenhua Energy's shares rose 1.3 percent, while PetroChina gained 1.68 percent on Monday.

Xiao Hai, a stock analyst with the Shanghai-based Shenya Investment Co Ltd, said listed companies which make air-quality monitors, air filters, energy-saving products, and masks may benefit from the nationwide concern about air quality.

Among those companies, the shares of Shenzhen-listed Hebei Sailhero Environmental Protection High-tech Co Ltd saw a 10 percent increase on Monday.

Worsening air pollution in Beijing and other cities has also sparked speculation that demand for products made by companies in the health and environmental-technology industries will increase, said Xiao.

Xiao added that the demand may be felt in the long term, given that smoggy days have become frequent around the country.

Individual investors said that their investment strategies are now taking into account air-quality issues.

"Air quality has been worsening in the past few days, but I don't have enough information to decide whether this issue will be around for a long time," said Tu Jun, a Shanghai-based individual investor, who has been tracking the share performance of two companies that make anti-pollution masks.

Tu said he has noticed that in the last two years the share prices of those companies have seen significant fluctuations during smoggy days in the winter and early spring. However, in most days in the summer - when the air is clear in Beijing and other cities in North China - the share prices of the companies do not see significant variations.

"I think if the air quality can't be kept at acceptable and stable levels, we'll certainly see demand for air filters, masks, drugs for the respiratory system, as well as facilities to reduce waste and save energy," said Tu.

Ma Yaping, a stock market analyst with Shanghai Jufeng Investment and Management Co Ltd, cautioned that investors should read the annual reports of companies that may profit from increased demand for air-quality related products before making any investment decisions.

Ma also advised investors to look at other companies, such as the makers of vehicles powered by "green" energy.