Analysis: Will the Stock Rally Sparked by President Xi’s Symposium Endure?
By Tang Ya
President Xi Jinping attended a high-profile symposium with private business leaders this week. Among six entrepreneurs who spoke at the event, five run companies related to high-tech manufacturing in energy or technology, while one was from the agricultural sector.
Looking back at Xi’s report to the 20th National Congress of the Communist Party in 2022, which underscored security in agriculture, energy, and industrial chains, it becomes clear that the direction of top-level policy design has been highly consistent.
A multitude of market analyses was published following the meeting on Monday, with many comparing the participating enterprises with those at the last such symposium in 2018. From our observations, there were no significant changes in the participating industries, with technology and manufacturing always being key national pillars.
However, this year saw a heavier weighting of artificial intelligence (AI) and manufacturing and a stronger emphasis on developing technologies that are more vulnerable to foreign restrictions. That was reflected in the attendance of Unitree Robotics, a humanoid robot developer, and Will Semiconductor Co. Ltd. and Cambricon Technologies Corp. Ltd., both of which are involved in chip development.
Additionally, the absence of Jiangsu Hengrui Pharmaceuticals Co. Ltd. might suggest no significant adjustment to China’s current approach to health care or the direction of the pharmaceutical industry.
If we look deeper, apart from agriculture, represented by New Hope Liuhe Co. Ltd., industries with close links to consumption like education, health care, and real estate were not represented at this year’s symposium.
This could suggest that policymakers view consumption as more of a demand-side issue. In other words, companies providing products or services with direct links to people’s lives need to survive and develop on their own. Policies aimed at supporting consumption are focused on encouraging household spending, rather than helping companies expand.
Looking at the broader picture, of the more than 50 enterprises selected in 2018, nearly 30 were listed companies. This year, 21 of the more than 30 selected are listed.
On the day of the 2018 symposium, most of the listed companies saw their share prices increase, with four recording a daily gain of more than 4%.
This year saw a similar trajectory. Most of the listed companies saw their stocks trend up. Five companies — Zhejiang Chint Electrics Co. Ltd., New Hope, Qi An Xin Technology Group Inc., Guangzhou Shiyuan Electronic Technology Co. Ltd., and Cambricon — rose around 5% on the day of the symposium.
But how long will this surge last?
In 2018, in the two weeks following the symposium, the majority of companies still showed a slight upward trend. However, reviews of their stock prices over longer periods showed that only a couple — Tongwei Co. Ltd. and Longi Green Energy Technology Co. Ltd. — had a relatively noticeable increase one month after the meeting, by a limited amount of around 1.5%. The upward trend faded one year after the event, with half of the listed companies even seeing falling share prices.
Tang Ya is a financial scholar and former associate professor of finance at Peking University.
Contact translator Qing Na (qingna@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
Image: Who is Danny – stock.adobe.com