Shanghai shares go gangbusters
China Southern Airlines and China Eastern have "upside", Goldman Sachs analysts wrote in a note to clients. Other companies, such as Lao Feng Xiang, a Shanghai jeweller, and Hong Kong-traded Shanghai Industrial Holdings, also stand to gain sharply.
The Shanghai Composite Index has risen 15 per cent since reaching this year's low on June 27.
Banks, shippers and port operators have all made gains since August 22, when the Ministry of Commerce said the city's free-trade zone proposal had been approved.
Shanghai International Port Group has had its shares rise 170 per cent in three weeks. China Eastern Airlines, which is based in Shanghai, has climbed 35 per cent.
"Given [any] earnings boost may show up only in the medium term, we prefer beneficiaries that have upsides based on existing businesses, with the Shanghai free trade zone potentially providing room for additional upside," Goldman Sachs wrote.
The free trade zone is part of a plan to develop the city into a global financial and shipping centre by 2020. A draft plan includes opportunities for foreign companies in industries from banking to health insurance.
Frequently Asked Questions about this Article…
The article says the Shanghai free trade zone is part of a plan to develop Shanghai into a global financial and shipping centre by 2020. It matters to investors because the zone could create new business opportunities and upside for companies already operating in the city, from banks and port operators to insurers and other service providers.
According to the article, banks, shippers and port operators have made notable gains since the proposal was approved. Shanghai International Port Group surged about 170% in three weeks, China Eastern Airlines rose around 35%, and the Shanghai Composite has climbed about 15% since its June 27 low. The article also highlights China Southern Airlines, Lao Feng Xiang and Shanghai Industrial Holdings as potential beneficiaries.
Goldman Sachs analysts wrote that China Southern and China Eastern have 'upside' because they are large domestic airlines based in or serving Shanghai and could benefit from increased trade and travel tied to the zone. The analysts also said they prefer beneficiaries with upside based on existing businesses, with the free trade zone offering room for additional gains.
The article reports the Shanghai Composite has risen 15% since hitting this year’s low on June 27. For everyday investors, that indicates renewed market momentum in Shanghai stocks since the free trade zone proposal, but the article notes potential earnings improvements may show up in the medium term rather than immediately.
The article highlights banks, shippers and port operators as immediate beneficiaries. It also mentions broader opportunities in industries from banking to health insurance, reflecting the zone’s goal of boosting Shanghai’s role as a financial and shipping hub.
Per the article, Shanghai International Port Group shares rose about 170% in three weeks following the announcement that the free trade zone proposal had been approved.
The article cites Goldman Sachs saying any earnings boost may show up only in the medium term. They prefer companies that already have solid existing businesses and stand to gain further from the free trade zone rather than relying solely on future policy effects.
The article notes a draft plan includes opportunities for foreign companies across sectors such as banking and health insurance. The idea is to open more areas to foreign participation as Shanghai develops into a global financial and shipping centre, potentially creating new market access for overseas firms.
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