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Stocks

Chinese pork purveyor WH Group rides high on 'hog cycle'

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Customers buy pork at a market in Beijing.   © Reuters

HONG KONG -- Shares of the world's biggest pork processor advanced Tuesday on expectations that inflation in China will fatten earnings.

Hong Kong-listed WH Group gained 2.03% to close at 6.04 Hong Kong dollars (78 cents).

Prices of China's favorite meat soared 33.5% on the year in April, the National Bureau of Statistics reported, far outstripping the 2.3% growth in the consumer price index and the 7.4% rise by food prices in general. Pork inflation accelerated from the previous month's already-high pace of 28.4%. Supplies of the meat are tight, the bureau said.

WH Group has sold pork products from U.S. subsidiary Smithfield Foods in the Chinese market since last fall. This is expected to produce richer profits, since the American meat is relatively cheap.

China has been on the upswing of the so-called hog cycle, a roughly three-year pattern of boom and bust in the pork market, since the middle of last year. WH Group's share price sank to an all-time low last November but then began a rally that saw it climb more than 70% to a year-to-date high last week.

Investors are reaching for other pork-related stocks, too. Shanghai-listed food and beverage group Shanghai Maling Aquarius gained more than 3% on Tuesday.

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