Some investors are betting that China's planned infrastructure spending
binge to boost its economy could mean the rally in construction and
materials stocks has further room.
Citing Bloomberg (13/2), the CSI 300 Infrastructure Index rose more than 8%
last week to its highest level in almost three years. These gains beat the
broader benchmark by a wide margin.
Record bank lending data in January also bode well for infrastructure
stocks. The increase in lending and bond issuance indicates construction has
picked up.
Meanwhile, there are several sectors that have benefited from several
infrastructure projects, such as telecommunication companies. Bearing in
mind, the Chinese government is redoubling its efforts to expand new
infrastructure focusing on 5G, data centers and artificial intelligence.
Masterplan 2020 shows this kind of investment will reach US$ 1.4 trillion by
2025. Meanwhile, More than 13 provinces have launched plans to build a total
of 425,000 5G BTS by 2022
That bodes well for telecommunications companies. China Mobile Ltd's share
price is up 16 percent this year. Information service provider Guangdong
Aofei Data Technology Co. will also benefit from the government project.
Cloud computing firm Beijing Advanced Digital Technology Co also jumped more
than 30% last week. SenseTime Group in Hong Kong, Iflytek Co and Hangzhou
Hikvision Digital Technology Co are also potential beneficiaries.
In addition, the shares of environmental companies could also rise due to
the government's plans to improve water treatment and waste disposal and
modernize these facilities.
Fujian Haixia Environmental Protection Group's waste and solid waste
processors rose 19% last week. The share price of pollution prevention
company GAD Environmental Technology also rose by the same amount.
Finally, there are also construction companies that will take part in taking
the money because there are new projects from local governments related to
the construction of roads, railways, and transportation centers.
Some companies have won big projects. For example, China Railway Signal
& Communication, China Railway Construction, and China State
Construction Engineering revealed the deal over the past few weeks.
These projects are likely to be positive for steel and cement makers such as
Angang Steel and Gansu Shangfeng Cement, as well as quarry equipment makers
including Sany Heavy Industry Co.
