Markets

Yangtze Delta plan fails to make its mark on stocks

By Wang Ying (China Daily)
Updated: 2010-05-26 09:31

The State Council has approved a regional development plan for the Yangtze River Delta, which aims to build the area into a major international gateway in the Asia-Pacific region, and a center of modern service and manufacturing industries around the globe.[China Daily]

Market shows lukewarm response to new initiative for region, likely to have medium, long-term effect

SHANGHAI: The approval of the Yangtze River Delta regional plan failed to add spice to related stocks on Tuesday trading, and the CBN Yangtze Index fell 0.74 percent amid an overwhelming downward adjustment on Tuesday.

The National Development and Reform Commission (NDRC) said on Monday that the State Council gave the green light to the regional plan for the Yangtze River Delta. But the market showed a lukewarm response to the news, with just 42 out of the 129 related stocks that Orient Securities monitors increasing.

Related readings:  Neighboring cities cash in on Expo to boost tourism  Regional plan for Yangtze?delta approved  Hotels in Yangtze River Delta see business boom  Yangtze Delta sees slower Q1 GDP growth

Shanghai-based China Television Media Ltd and Zhejiang-based Zoje Sewing Machine Co Ltd took the lead by surging 6.63 percent each.

According to the plan, the Yangtze River Delta will be developed into a key international gateway for the Asia-Pacific region, and an important global center for modern service industry and advanced manufacturing, as well as a world-class urban cluster.

"In fact, the regional development plan has been talked about for several months, and the market has already digested the good news," said Li Ying, a strategic analyst with Xiangcai Securities.

"Another reason the market didn't get a boost was that Shanghai and Shenzhen posted the biggest single-day gain over the past eight months on Monday," added Li.

"The positive effect of the plan will gradually be felt by electronics, textile, media and mass communication, tourism and catering companies," she said.

According to Li Xianming, an analyst from Ping An Securities, the plan is certain to generate many opportunities for listed service companies and high-end manufacturers.

"Stocks related to the sector didn't immediately pick up because the details of the plan were not revealed, and no one is sure what kind of companies will benefit more," said Li.

Li suggested the plan is more likely to have a medium- to long-term positive effect on Yangtze River Delta stocks.

The Yangtze River Delta is made up of Shanghai and the provinces of Jiangsu and Zhejiang, covering an area of 210,700 square kilometers. The region leads the nation in new service industries and modern manufacturing.

"The Yangtze River Delta possesses an advantageous location, excellent natural resources, solid economic foundations and has become one of the country's most economically competitive regions," said the NDRC.

Being China's most developed area, Shanghai's goal is to build an international financial and shipping center, and analysts said this grand goal should be coordinated with the new regional plan.