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
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.