Hong Kong Stocks Fly After the New Economic Zone is Announced

What’s in a Name?  If it’s got Beijing or Tianjin in it, a record breaking one day rise on Monday.

ezone table 1

Econ Zone Table Movers2

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.)

ezone bbmg 2009

ezone china national building mat 3323

ezone china suntien 956

ezone tianjin dev 882.PNG

ezone Tianjin Jinrun Public Utilities 1265.PNG

ezone tianjin port 3382

ezone china oriental 581.PNG

 

ezone beijing oriental 581

ezone beijing n star 588

ezone capital land 2868.PNG

ezone beijing ent 392 final

ezone beijing urban construction 1599

ezone kunlun energy 135

Whether the rise will be justified remains to be seen.  However, the impact from a political announcement was substantial.

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