China’s plans to develop a huge region south of Beijing sent construction and real estate stocks surging on Wednesday.Dubbed the Xiongan New Area, the zone is 100 km (62 miles) south of downtown Beijing.
Xiongan will cover 100 square km (39 square miles) at first, eventually sprawling out to 2,000 square km.Investors clearly see opportunities ahead, pushing several stocks to their upper 10% limit for daily gains in China.Whether the Xiongan New Area will be as significant as the Shenzhen Special Economic Zone and Shanghai Pudong New Area remains to be seen.
Investors clearly see opportunities ahead, pushing several stocks to their upper 10% limit for daily gains in China.The standout winner was cement maker BBMG, which has jumped a stunning 49% so far this week. BBMG is listed in Hong Kong, where markets were closed on Tuesday, but open on Monday.
Mainland stocks on a tear include Xuanhua Construction Machinery, Risesun Real Estate, transport machinery provider Jikai Equipment Manufacturing and Xinxing Ductile Iron Pipes, which makes pipes for gas and water. Energy providers also made strong gains.
But some analysts are cautious about Xiongan, saying it won’t have the same impact as Shenzhen or Pudong.“While the new zone will boost regional development and offer opportunities for some firms and investors, the impact on the broader economy is likely to be limited,” Julian Evans-Pritchard, an economist with Capital Economics, wrote in a research note.