- The stock price of China’s Jinzhou Port has jumped 94% since Russia’s invasion of Ukraine began.
- The port has warned that its share price has “seriously deviated from the company’s fundamentals.”
- Small-time Chinese investors have been eager to cash in on China’s ties to Russia.
A large port in northern China is warning that its stock may have become overvalued after Chinese investors drove up its price by 94% amid widespread speculation that Beijing and Moscow will improve their economic ties.
Jinzhou Port, located just northeast of Beijing, released a Shanghai Stock Exchange filing on Tuesday cautioning that its share price “has seriously deviated from the company’s fundamentals” and is “significantly higher” than the industry average.
Since Russia began its invasion of Ukraine on February 24, Jinzhou Port’s share price has leaped from $0.45 to $0.88 on Monday — although it tapered off to $0.71 as of Wednesday morning Beijing time.
The port’s rapid gains come in the face of tight Chinese stock market regulations, which state that regular stocks in China are only permitted to increase in price by a maximum of 10% per day.
In its Tuesday filing, the company said that it “especially reminds investors to pay attention to market trading risks” and make rational decisions.
At least a dozen Chinese stocks in trade-related industries have reported similarly skyrocketing gains following the invasion of Ukraine, The Financial Times first reported on Friday.
Meanwhile, CNN reported that goods transport firm Xinjiang Tianshun Supply Chain had seen its share price nearly double. The firm, located in the Xinjiang province that borders Russia, has seen its stock price rise from $2.22 on February 24 to $4.27 on Monday.
In January and February, trade between China and Russia increased by 38.5% compared to the same period last year, Nikkei reported. According to the Chinese state-aligned outlet The Global Times, trade between the two nations hit $146 billion in 2021.
In early February, both countries also pledged to raise their annual bilateral trade value to $250 billion by 2025.
China has indicated a willingness to help Russia attempt to offset the West’s heavy sanctions, reaffirming its relationship with the Kremlin as “rock solid” and lifting wheat import restrictions on its neighbor. Russian banks have also flocked to China’s UnionPay payment system after Mastercard and Visa suspended their operations in Russia.
Still, the explosive growth for companies like Jinzhou Port has primarily been driven by small-time investors eager to cash in on the corridor Beijing has left open for Moscow. Around 76% of orders on the Shanghai and Shenzhen stock exchanges related to trade with Russia are worth below $31,692, or 200,000 yuan, CNN reported, citing financial data service East Money Information.
By comparison, China’s CSI 300 Index — which tracks 300 top stocks in the Shanghai and Shenzhen exchanges — fell 7.02% from $716.94 on February 24 to $666.60 on Wednesday morning.
Analysts told the Financial Times that most of the companies the small-time investors are focused on — including Jinzhou Port — would not benefit significantly from improved bilateral trade.
“It’s mostly a domestic port,” said Sitonia Consulting co-founder Darin Friedrichs, referring to the port, per the outlet. “The fact that it’s geographically close to Russia is irrelevant.”
On top of this, China’s exports to Russia amount to only less than 2% of the former’s annual export volume, according to the latest data from the World Bank. By comparison, the US accounted for 16.5% of China’s total export volume that year.