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Hainan plan gives related firms a boost

By Shi Jing in Shanghai | China Daily | Updated: 2018-04-17 10:33
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20 listed companies see surge in share prices, with 17 soaring by 10% daily limit

Share prices of Hainan-related companies rallied on Monday in response to President Xi Jinping's speech on Friday supporting the building of the whole island into a pilot free trade zone and a free port with Chinese characteristics.

According to Wind Info, a Shanghai-based financial information service provider, companies related to the Hainan development plan showed the most robust increase of 7.15 percent on average on Monday, while the benchmark Shanghai Composite Index fell 1.53 percent to close at 3,110.65 and the Shenzhen Component Index dropped 0.61 percent to close at 10,621.79.

A total of 20 Hainan-related companies reported price increases on Monday, with 17 of them soaring by the daily 10 percent limit, including Haikou-based manufacturing company Sundiro Holding, Hainan Shennong Gene Technology, and Haima Automobile Group.

Public information shows that there are 30 Hainan-based companies listed on China's A-share market. By the end of the third quarter of 2017, these companies' total assets came to 434.5 billion yuan ($69.2 billion).

Hua Chuang Securities wrote in a note that Hainan is home to a number of important port cities such as Haikou and Sanya. The number of port cities will help Hainan achieve rapid development in terms of logistics, transportation and services. Therefore, resources such as commodities, technologies and raw materials will be allocated in a more reasonable way, helping the local economy to grow at a faster pace.

Investors should watch closely companies related to ecological landscaping, tourism, construction materials, transportation and favorable tax policies, analysts from Hua Chuang Securities suggested.

Regarding the central authorities' plan on Hainan's reform, analysts from Ping An Securities said that investors should keep an eye on companies specializing in high-tech, digitalization, high-end manufacturing and consumption.

Analysts from TF Securities wrote in a note that horse racing and large international sports events should be the two areas that are likely to see rapid development following the announcement of the central authorities' plan. While taking Shanghai (China) Pilot Free Trade Zone-the first of its kind in China-as an example, Hainan still lags behind in terms of the contribution of wholesaling and retailing to local GDP. In this sense, companies related to these two sectors in Hainan will have much room to grow, according to the note.

The Central Committee of the Communist Party of China and the State Council jointly released a document on Saturday, saying that China is aiming to establish a free trade system in Hainan by 2025 and make the free port system more mature in the province by 2035.

Information technology, deep-sea science and technology, tourism, ecological environment and resource conservation will be the major areas concerning Hainan's reform, according to the document.

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