Seeing Shanghai Free Trade Zone possibilities in China equities

Written by Ryan Oh || 17 Sep 2013

As China moves along its path of financial reform, starting with the interest rate reform and the Free Trade Zone (FTZ) in Shanghai, it is not hard to see equity investors moving towards Shanghai-based firms and FTZ-related firms.

Two FTZ-related firms, Shanghai Pudong Development Bank and Shanghai Waigaoqiao Free Trade Zone Development Co. Ltd below are examples that illustrate the anticipation of investors - showing the rapid rise in stock prices after the FTZ announcement. As anticipation is building up for the further announcement of market reforms after Li Keqiang’s announcement of the PRC’s strong commitment towards further changes, FTZ-related items and firms are likely to benefit more in the stock market, while the other sectors should wait and anticipate the further announcement’s direction. If done in time and in an appropriate manner, sequential reforms could be a key part of China's GDP growth over the few next years.

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