Shares of most Hainan-based companies jumped by their 10 per cent daily limit on Monday after Beijing said it would allow the southernmost province to develop horse racing and sports lotteries as part of plans to turn the island into China’s biggest pilot free-trade port.
Companies engaged in businesses ranging from making cars to shipping such as Haima Automobile Group, China Hainan Rubber Industry Group, Xinlong Holding Group, Hainan RuiZe New Building Material, Hainan Strait Shipping, HNA Innovation and Hainan Expressway, rose by the maximum limit in Shenzhen and Shanghai as retail investors drove the momentum.
But analysts warned that it could be a one-off phenomenon.
“The mentality of retail investors in the mainland is quite different from that of Hong Kong equity investors, a majority of whom are institutions,” said Alex Wong Kwok-ying, director at Ample Finance Group in Hong Kong. “This kind of situation has happened numerous times before, which often proves to be just some very short-term swings on the markets.”
Wong also said investors who hold Macau casino shares should not panic as it will take a long time for Hainan to materialise its plans because Macau will continue to have a healthy flow of business from the mainland.
Shares of casino operators were mixed, with MGM China adding 0.3 per cent, practically unchanged from last Friday and Sands China shedding 1.1 per cent.
Beijing issued guidelines late on Saturday, a day after Chinese President Xi Jinping unveiled a grand plan for Hainan, already one of the country’s special economic zones.
Under the plan, the island covering 35,000 sq km (13,500 square miles) and home to 9.3 million people, is expected to be the beneficiary of more opening-up policies, economic freedom and market access, including “exploring the development of sports lotteries and instant lotteries on major international events”, state-run Xinhua reported, citing the guidelines.
Meanwhile, companies with operations in Hainan but listed in Hong Kong had different fortunes.
Fosun International, a Chinese acquisitive conglomerate which has a luxury resort in Sanya set to open at the end of the month, fell 2.5 per cent, while Guangzhou R&F Properties, which controls a subsidiary in Hainan, shed 2.7 per cent.
Fosun said it was “very glad to see” the guidelines issued by Beijing.
“The tourism segment of Fosun has had a number of brands and products that have already entered the Hainan market, including Club Med Sanya which opened two years ago and sees more than 30 per cent of customers come from overseas,” Qian Jiannong, chairman and president of Fosun Tourism and Culture Group, told the Post. The company bought Club Med in 2015.
“Fosun will bring more of its tourism brands to Sanya, and we hope through the efforts of the company, we could help Sanya to become a leading international resort.”