A major port in northern China is warning its stock could be overvalued after Chinese investors boosted its price by 94% amid widespread speculation that Beijing and Moscow will improve economic ties.
Since Russia began its invasion of Ukraine on February 24, Jinzhou Port’s share price rose from $0.45 to $0.88 on Monday, although it fell to 0.71 $ Wednesday morning Beijing time.
The port’s quick gains are coming up against strict Chinese stock market regulations, which stipulate that common stocks in China are only allowed to increase in price by a maximum of 10% per day.
In its Tuesday filing, the company said it was “particularly reminding investors to pay attention to market business risks” and to make rational decisions.
Meanwhile, CNN reported that freight forwarding company Xinjiang Tianshun Supply Chain saw its share price nearly double. The company, located in the Xinjiang province bordering Russia, saw its stock price drop from 2.22 dollars on February 24 to 4.27 dollars on Monday.
In January and February, trade between China and Russia increased by 38.5 percent compared to the same period last year, Nikkei reported. According to Chinese state-aligned media The Global Times, trade between the two nations reached $146 billion in 2021.
In early February, the two countries also pledged to increase the annual value of their bilateral trade to $250 billion by 2025.
Yet the explosive growth of businesses like the port of Jinzhou has been driven primarily by small investors eager to cash in on the corridor Beijing has left open to Moscow. About 76% of orders on the Shanghai and Shenzhen exchanges related to trade with Russia are worth less than $31,692, or 200,000 yuan, CNN reported, citing financial data service East Money Information.
By comparison, China’s CSI 300 index, which tracks the top 300 stocks on the Shanghai and Shenzhen stock exchanges, fell 7.02% from $716.94 on Feb. 24 to $666.60 on Wednesday morning.
Analysts told the Financial Times that most of the companies retail investors are focusing on, including the port of Jinzhou, would not benefit significantly from improved two-way trade.
“It’s primarily a domestic port,” Sitonia Consulting co-founder Darin Friedrichs said, referring to the port, according to the outlet. “The fact that it is geographically close to Russia is irrelevant.”
Moreover, China’s exports to Russia are only less than 2% of the former’s annual export volume, according to the latest World Bank data. In comparison, the United States accounted for 16.5% of China’s total export volume that year.