Free-Trade Rally Spreads From Tianjin to Qingdao: Shanghai Mover

The rally in companies linked to free-trade zones in China spread to Tianjin and Qingdao as investors speculated the government will let more cities follow Shanghai’s plan for reduced regulation.

Tianjin Port Co. (600717), Tianjin Marine Shipping Co. (900938) and Tianjin Quanye Bazaar (Group) Co. (600821), a department store operator, all jumped 10 percent at the 3 p.m. close in Shanghai. The Shanghai Composite Index (SHCOMP) added 0.6 percent. Qingdao Kingking Applied Chemistry Co. (002094), a maker of wax products, also jumped by the daily limit in Shenzhen.

Tianjin is awaiting approval from the central government to set up a free-trade zone in the Dongjiang Bonded Port Area, Radio Television Hong Kong reported Sept. 30. China’s markets were shut for a week from Oct. 1 for holidays. Companies with the word Shanghai in their name surged since Aug. 22, when the Commerce Ministry said the government approved a free-trade area in the coastal city.

“The market is speculating there will be a second or third free-trade zone after Shanghai and port cities are the most likely candidates,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Free-trade zones represent the direction of China’s deepening reforms, which will reduce the government’s intervention in economic activities.”

Companies based in Qingdao jumped after the Ministry of Commerce said the eastern city is planning a free-trade zone that will link China to Japan and South Korea. Qingdao Doublestar Co., a maker of athletic footwear, surged 6.1 percent.

Qingdao’s plans include an international trade center, according to a statement on the website of the Ministry of Commerce dated yesterday.

Ports Rally

Dalian Port (PDA) Co. and Wuhu Port Storage & Transportation Co., based in Anhui province, both surged 9.9 percent, while Ningbo Port Co. gained 4.8 percent.

Shanghai International Port Group Co. has surged 133 percent since Aug. 22. The stock has fallen 14 percent over the past five trading days since the zone opened.

“There are buy and hold opportunities in the sector but there is going to be some volatility,’ Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. in Shanghai, wrote in an e-mail.

To contact Bloomberg News staff for this story: Allen Wan in New York at awan3@bloomberg.net; Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net

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