NEW YORK ( TheStreet) -- Shares of China-based petroleum companies fell in morning action on the New York Stock Exchange Friday on the Chinese government's plans to introduce a new national resources tax on coal, oil and gas exploration in the country.
PetroChina (PTR - Get Report), an oil and gas producer and seller, China Petroleum & Chemical Corp (Sinopec) (SNP - Get Report), a Chinese energy and chemical company, and Sinopec Shanghai Petrochemical (SHI) a Chinese petrochemicals company, lost 0.13%, 1.67% and 1.53% of their respective market values. In comparison, Dow Jones Industrial Average and S&P 500 Index gained 1.20% and 0.94%, respectively, on Thursday.
Reports from China's Ministry of Finance indicate that 5% benchmark will be used with certain variations for each commodity. Beijing has already introduced a 5% tax in Xinjiang, one of the oil-rich regions in China's western provinces. The government wants to raise funds in order to boost development in some of China's poorer regions, especially in the west.
But the move is also part of an effort to alleviate tensions among some of the minority groups in China. Xinjiang is home to a huge Muslim population, and was the site of deadly rioting that left almost 200 dead last July."If it goes nationwide this year and the companies get a full year of impact from the tax, it may take down PetroChina's earnings per share by 12% and Sinopec 7%," Brynjar Eirik Bustnes, an analyst at JPMorgan Securities Ltd. in Hong Kong, told Bloomberg. China's National Development and Reform Commission estimates the resource tax could generate $580-$730 million, according to Xinhua News Agency. More recently, resource taxes have been proposed in Australia, where the incoming Prime Minister Julia Gillard reduced the proposed taxes and received support from mining giants BHP Billiton (BHP) and Rio Tinto (RTP).