(Bloomberg) -- A planned meeting between the top leaders of China and North Korea has sent stocks of companies with businesses near the two countries' border surging.
Chinese President Xi Jinping will travel to Pyongyang for talks with his North Korean counterpart Kim Jong Un on Thursday, state media reported. The two-day trip will be Xi's first visit as a Chinese leader to North Korea, as well as the first by China's top official in about 14 years to the impoverished state that depends on Beijing for economic support.
Investors in China's equity markets were quick to act on the news. Changbai Mountain Tourism Co., Jilin Expressway Co., Liaoning SG Automotive Group Co. and Changchunjingkai Group Co. all jumped by as much as the 10% daily limit on Tuesday. Jilin Yatai Group Co. and Jinzhou Port Co. also rose by at least 5%. The companies are all based in northeastern China near the border with North Korea.
"Talks between Xi and Kim are usually seen as a friendly sign of further opening for the DPRK," said Zhang Yankun, fund manager at Beijing Hone Investment Management Co. "While companies near the border could benefit, it's mainly based on sentiment."
Chinese stocks have previously also risen each time the two leaders met. When Kim and Xi exchanged a handshake in Beijing earlier this year, Jilin Expressway surged by the limit. Changbai Mountain also rose 10% when Kim visited Xi in Beijing in March 2018.
"But if history is a guide, these trades rarely last more than a day," Zhang said.
To contact the reporters on this story: Magdalene Fung in Hong Kong at sfung76@bloomberg.net;April Ma in Beijing at ama112@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Magdalene Fung
©2019 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
