(Bloomberg) -- Chinese construction shares surged after Xinhua News Agency reported President Xi Jinping will create a new economic zone in Hebei province to rival Shenzhen and Pudong district in Shanghai.
BBMG Corp. jumped 35 percent at the close in Hong Kong to lead gains among cement producers, while Tianjin Port Development Holdings Ltd. advanced by the most in almost two years. Xinhua reported on Saturday China plans to set up Xiongan New Area in Hebei province, nearby to Beijing. The Hang Seng Composite Index climbed 0.8 percent. Mainland Chinese markets are closed for a holiday until Wednesday.
The new economic area, located about 100 km southwest of downtown Beijing, will span three counties that sit at the center of the triangular area formed by Beijing, Tianjin, and Hebei's provincial capital Shijiazhuang, Xinhua reported on Saturday, and will help to phase out non-key functions from Beijing. By Sunday, the government had suspended all property sales in the new zone to prevent speculation. Separately, Xi will meet U.S. President Donald Trump this week.
“Cement, construction and port-related stocks are surging on the news that China plans to set up a new economic zone in Hebei province,” said Bill Bowler, a sales trader at Forsyth Barr Asia Ltd. in Hong Kong. “This would be one of the centerpieces of a high-level development plan for the Beijing-Tianjin-Hebei region. I would liken it to the development of a brand new New York City, with Beijing as Washington. The regional plan has been termed a ‘1000-year project'; the first of its kind since Mao.”
The Hang Seng Index gained 0.6 percent, extending its 9.6 percent advance in the first quarter. Hong Kong financial markets will be closed Tuesday.
Monetary tightening will likely continue to be a theme for investors in the second quarter. The People's Bank of China raised interest rates for standing lending facility loans, aimed mainly at small- and medium-sized financial institutions, over the weekend. The central bank will probably keep a tight rein on money-market rates this year, raising the cost of short-term funds at least twice in moves that will pressure bonds, according to a Bloomberg survey.
Tianjin followed a number of Chinese cities to roll out additional property-market cooling measures on Saturday.
- BBMG soared 35% at the close, the most since July 2009. Hebei is among core strategic regions for BBMG's cement business: statement. China National Building Material Co. climbed 7.4% and Asia Cement China Holdings Corp. added 3.5%. Tianjin Port Development Holdings jumped 16%, the most since April 13, 2015.
- Galaxy Entertainment Group Ltd. gained 1.1% after data showed Macau's casino revenue growth in March accelerated at the fastest pace in eight months, as both high rollers and leisure gamblers return to the world's largest gaming hub.
- Guangzhou Automobile Group Co. climbed 4.2% in Hong Kong after its rating was raised to buy from neutral by Angus Chan at Bocom International Holdings Co.
- China Eastern Airlines Corp. slipped 2.4% in Hong Kong after its rating was cut to hold from buy by Ajith Kom at UOB Kay Hian Pte Ltd.
- CT Environmental Group Ltd. fell 6.1% after its rating was lowered to neutral from outperform by Alan Hon at Macquarie Group Ltd.
--With assistance from Hannah Dormido
To contact the reporters on this story: Jeanny Yu in Hong Kong at jyu107@bloomberg.net, Lisa Pham in Hong Kong at lpham14@bloomberg.net.
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, Ron Harui
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