Russian Sanctions Impact Stock Market Valuations Rise In Asian Markets
Chinese and Central Asian Stock Markets are showing high growth activities in certain areas as investors pile into Russian and Southern Corridor supply chains, with stocks doubling in a few days in certain cases. Ports, logistics and transportation sectors are all sought after.
With sanctions on Russia having a crippling effect on the economy and import-export trade, Asian and especially Chinese entrepreneurs are flooding capital into stocks expected to rise as a result of increasing opportunities arising from Russia’s effective exit from European supply chains.
A primary example is China’s Jinzhou Port, which is situated in China’s North-East Liaoning and is a major facility for handling East Chinese imports and exports to North-East Russia. Jinzhou is also connected to China’s national rail network and is an important conduit in China-Russian trade. It is also listed on the Shanghai Stock Exchange, where its stock market value more than doubled in 24 hours earlier this week from RMB2.85 to RMB5.57. It is currently trading at about RMB4.49 as at close of business Wednesday. That has prompted the company to issue a warning stating that the current traded valuation “has seriously deviated from the company’s fundamentals” and is “significantly higher” than the industry average.
Another example is Xinjiang Tianshun Supply Chain Co.Ltd; which handles logistics from Western China to Kazakhstan and Russia. The company has seen its stock price rise from RMB14.04 on February 24 to RMB27.0 within a week.
It is believed that the sudden growth in demand for stocks in companies like Jinzhou Port has primarily been driven by small-time investors, looking to cash in on the China-Russia trade corridor. Around 76% of orders on the Shanghai and Shenzhen stock exchanges related to trade with Russia are worth below US$31,692, or RMB200,000.
Investors should be careful with sudden movements – these remain high risk plays. Nevertheless, as the sanctions begin to bite, there may well be opportunities for investors to consider stocks in strategically placed logistics and transportation corridors with Russia, and especially from Central Asia, including the EAEU and CIS states, in addition to Turkey, India, Pakistan, and China.
There will also be opportunities for the same types of stocks as the Southern Belt and Road routes from Kazakhstan, Armenia, Azerbaijan, Georgia, Turkey and the European Black Sea ports, logistics and transportation companies as they begin to attract increasing interest now that supply chains are shifting.
* Note: we cannot accept any responsibility for any investments made on behalf of this report. We advise all interested parties to seek their own, independent professional investment advice in this area.
