Chinese health care companies surge on stock exchanges, while airlines crash
April 7, 2020 Category China News Round-up, Weekly
Chinese health care companies have seen there shares rise on the country’s stock exchanges. The sector rose already by 18.1% this year. Zhejiang Orient Gene Biotech Co surged 212% on Shanghai’s STAR Market this year, while Shenzhen-listed Intco Medical Technology Co soared 170%. Trailing not far behind are companies involved in farming, forestry, animal husbandry and fishing – up by nearly 13%. Heilongjiang Agriculture Co jumped by 57.7%, and New Hope Liuhe Co, an animal feed company, advanced 56%. Not all sectors have been so fortunate. With travel restricted, the sub-index for aviation stocks has plummeted 21.6% since the beginning of the year. Juneyao Airlines Co has fallen 34.4%, while Air China’s shares declined 30.8%. Insurers, including China Pacific Insurance Group Co and China Life Insurance Co, have slumped 20.5% as a group. The banking sector, including PingAn Bank and Bank of Ningbo, has lost about 16%.
The best two performing stocks this year are Starpower Semiconductor and Fuzhou Rockchip Electronics Co, up 903% and 493.8%, respectively. The worst performing duo are Jiangsu Boxin Investing & Holdings Co and Beijing Xinwei Technology Group, which was the subject of negative press last year. Amid the Covid-19 pandemic, many individual investors are wary about investing in stocks, switching to gold and bonds. Others are adjusting their share preferences, moving into infrastructure, entertainment and online company stocks. CITIC Securities is predicting that the A-share market will likely bottom out this month. “China had led other countries in controlling the epidemic, and China’s economic activity is likely to take the lead in the recovery, with growth mainly driven by domestic demand,” said Qin Peijing, Chief Strategist of CITIC Securities.“Chinese stocks and fixed-income assets, will become more attractive relative to assets of developed countries and will be the first choice in the process of global capital reallocation,” he added. Technology leaders in 5G phones, cloud computing and internet data will remain a major investment theme for the rest of the year, he added.
Qin said he particularly likes companies that benefit from domestic-driven demand and companies that don’t rely heavily on either overseas revenue or upstream material supply chains. Even amid the coronavirus pandemic, the Shanghai stock markets have been welcoming new listings. Initial public offerings (IPOs) hit a new peak in the first quarter, when 34 companies raised an aggregate USD9.8 billion on Shanghai’s main board and new STAR Market, surpassing new listings on New York’s Nasdaq, where 17 companies raised USD5.13 billion in first-quarter IPOs, according to Refinitiv. All 34 are now trading above their initial offer prices. The strong performance of the IPO market this year is partly due to the CNY30.7 billion January share sale by Beijing-Shanghai High Speed Railway, the biggest first-quarter deal globally, the Shanghai Daily reports.
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