The Motley Fool

Why did WH Group Shares Surge Over 10% Today?

What happened

Shares of the world’s largest hog producer WH Group Limited (SEHK: 288) gained as much as 12.1% today in Hong Kong.

The benchmark Hang Seng Index rallied over 4% on news that a deal is close in the US to respond to the coronavirus crisis with a sizeable fiscal response from the government.

WH Group was the Hang Seng Index’s biggest constituent gainer on Tuesday and its shares finished the trading day at HK$6.60, up 10.7%.

So what

WH Group, formerly known as Shuanghui Group, operates as the world’s biggest largest pork producer after it acquired US-based Smithfield Inc in 2016.

Pork prices have skyrocketed recently as African Swine flu keeps the supply of hogs limited. Hong Kong-listed COFCO Meat Holdings (SEHK: 1610) posted strong 2019 results today and predicted hog prices would remain high throughout 2020.

This proved to be a boost for sentiment surrounding WH Group, which itself is reporting full-year earnings after the market close.

Now what

The tightened supply of domestic hogs in China due to the coronavirus outbreak will likely keep pork prices high. China, the world’s largest consumer of pork, has also wrestled with the persistently elevated price of pork.

Investors should watch how pork prices play out throughout the rest of 2020 and how WH Group management guides for 2020 when it releases its results.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Tim Phillips doesn’t own shares in any companies mentioned.