Profit taking drags FTZ concept stocks
Updated: 2014-12-16 05:59
By Celia Chen in Hong Kong(HK Edition)
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The formal announcement last Friday of the creation of three new free trade zones, (FTZs) based on the Shanghai model, triggered a wave of profit taking on Monday, sending many concept shares tumbling.
Tianjin Port Development Holdings Ltd led the fall with its share price going down 4.7 percent to HK$1.81. But investors who had bought the company's shares earlier have nothing to complain. Despite the drop, Tianjin Port's share price was still 52 percent higher than it was six months ago when the FTZ concept began to take hold.
Another FTZ concept stock, Xiamen International Port Co, tumbled 4.4 percent to close at HK$2.19 Monday. But analysts said the latest faltering was just a minor adjustment to its upward spiral in the past six months when the share price advanced 92 percent.
Among other FTZ concept stocks, Guangdong Investment Ltd shed 2.4 percent to close at HK$10.42, while China International Marine Containers Co fell to HK$ 17.94, down 3.7 percent.
"All the stocks related to China's new FTZs had risen sharply before Friday's official announcement," said Linus Yip, a strategist at First Shanghai Securities Ltd in Hong Kong. "It's not surprising for investors to sell the shares to make profit," he said.
Yip and others said these shares have lost their speculative allure because they are no longer "concept" stocks. These stocks will have to be evaluated by what they can gain from the FTZs in their respective home towns, the analysts said.
Yip has remained bullish about those FTZ related stocks. "Xiamen International Port especially will see its share price climbing continuously in coming months because it has completed its integration of its cargo handling facilities and its profit is expected to increase with strengthened pricing abilities in future," he said.
Kenny Tang Sing-hing, a general manager at AMTD Financial Planning, said he wasn't too concerned about the hiccups of FTZ concept stocks. "Those shares will rebound in near term, I believe. It's the profit taking that dragged down their share prices. And the recent poor Hong Kong stock market performance had also contributed to the price fall," he said.
Tang noted that the creation of new FTZs would undoubtedly benefit related enterprises in the longer term because they stand to benefit from the various supportive policies coming into play.
The three new FTZ zones will be established in the southern and eastern provinces of Guangdong and Fujian and in the northern port city of Tianjin, the State Council said.
Shares of Fujian Holdings Ltd, which is engaged in investment, property and hotel on the mainland, surged 25.4 percent to HK$0.74 on Monday. But Tang said the company would not be worthy of long-term investment due to its poor core business performance.
(HK Edition 12/16/2014 page8)