People squeeze into a bus in a station in Jinjiang, Fujian province. Analysts said expressway shares will continue to be active with relatively large turnover. [China Daily]
Investors turn to defensive stocks as market remains directionless
Expressway shares surged yesterday with investors turning to defensive stocks as the overall market remained directionless amid mounting concerns of tighter monetary policy.
Shandong Expressway Co Ltd led the gains by rising 7.47 percent to 5.9 yuan. Huabei Expressway Co Ltd also jumped 6.65 percent to close at 5.77 yuan.
"Defensive stocks such as listed toll-road operators tend to be less risky with guaranteed profits while persistent worries of tighter monetary policy still dominate the overall market," said Wei Fang, an analyst at Goldstate Securities.
The Chinese equity market remains weak as investors are adopting a wait-and-see stance in the run-up to the week-long Lunar New Year holiday starting this weekend. Market activities are expected to thin out with light turnover prior to the holiday season.
So far the benchmark Shanghai Composite Index has declined 11 percent this year on concern the government will raise interest rates and curb lending to cool the economy and avert asset bubbles.
Yesterday's rise of the toll-road operators was also triggered by investors' expectations of surging holiday travel as the country enters the peak traffic season with millions on the way home, analysts said.
The Ministry of Transport said on Monday that 609 million trips had been made by bus or railway since Jan 30 when the holiday travel season began, up 8.5 percent from the same period last year.
Analysts said expressway shares will continue to be active with a relatively large turnover and an increasing volume of capital flow partly due to government plans to boost economic development in key regions.
"Transportation and logistics are the bellwether of economic growth," Wei said. "Expressway companies will be among the first to benefit from the government plan to develop new economic zones including Hainan province and Chongqing municipality."
Meanwhile, toll-road operators are seeking to expand into the financial and real estate sectors for new profit growth, which may also bring good opportunities for investors, Wei noted.
Shandong Expressway Co Ltd has signed an agreement with private property developer Greentown to invest up to 2.75 billion yuan in property projects. Guangdong-based toll-road operator Dongguan Development Co Ltd has also invested heavily in brokerage company Dongguan Securities by acquiring a 20 percent stake in the company this year.
