SHANGHAI: Chinese speculators pounced on stocks with “emperor” in their name on Monday, after the ruling Communist Party set the stage for President Xi Jinping to stay in office indefinitely.
The party proposed on Sunday to remove a constitutional clause limiting presidential service to just two terms in office, boosting prospects of Xi remaining in power after the end of an all but certain second term set to start next month.
Shenzhen Emperor Technology Co Ltd surged nearly 10 per cent in morning trade, while Anhui Yingjia Distillery Co — whose Chinese name includes the phrase “greeting the emperor’s carriage” — rose as much as 4 per cent. Harbin VITI Electronics Corp, which has words meaning “powerful emperor” in its name, shot up over 7 per cent at one point.
The broader market meanwhile, rose less than 1 per cent.
“This is pure ‘stir-frying’. It has got nothing to do with fundamentals,” said Yang Hongxun, Shanghai-based analyst at investment consultancy Shandong Shenguang, adding he expects those shares to be dumped “pretty soon”.
The “emperor” stock boost isn’t the first such play by Chinese speculators.
Last October, Hangzhou Huning Elevator Parts Co, a little-known Chinese elevator maker whose name is similar to Chinese Communist Party theoretician Wang Huning, surged after Wang got promoted to China’s top political body.
Bets on so-called “concept” stocks — a popular practice in China — underscore the enduring influence of short-term speculators, despite a campaign by regulators against “pump and dump” trading ahead of the inclusion this June of China’s A-shares in MSCI’s global indexes.
Shandong Shenguang’s Yang said the possible extension of Xi’s tenure could help ensure political stability and would be good for promoting deeper and wider economic reforms.
Yang’s view was echoed by brokerage Everbright Sun Hung Kai, which said a more powerful Xi could make policy implementation more efficient, for example at local government and state-owned enterprise (SOEs) levels.
But the market’s knee-jerk response to the proposed constitutional change already showed signs of being short-lived. Vatti Corp, whose name stands for “Chinese emperor” in Chinese, opened up 7.3 per cent, but had retreated to be up just 1 per cent by midday. — Reuters
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