What’s in a Name? If it’s got Beijing or Tianjin in it, a record breaking one day rise on Monday.
Large cap, small cap, these are the stocks which the market projected to gain from the newly-announced Xiong’an New Area, which has been heralded as the New Shenzhen. The area is to include the already robust areas of Beijing and Tianjin, while broadening to encompass the rust belt of Hebei province. Not all the stocks had those names, but they were dominant in the movers. There is skepticism as to what this will really entail, Per a Reuters article.
In a strategy note, NSBO Research said it would be difficult for policymakers to replicate the boom of Shenzhen in Xiongan in the current environment of a slowing economy, but rather it would create another political center.
“It is essentially a greenfield site, with very little in the way of existing manufacturing expertise and no nearby financial centers to call upon,”, said Rafael Halpin, head of research at NSBO.
Nevertheless, the over-exuberance can be seen in the following charts. (The last close was for 4/3/2017 – the Hong Kong stock market was closed on 4/4/2017 for the Ching Ming Festival; Shanghai and Shenzhen were closed on 4/3/2017 as well as 4/4/2017 so haven’t reflected the good news.)
Whether the rise will be justified remains to be seen. However, the impact from a political announcement was substantial.