Chinese investors' exuberance spreads to military stocks
But it is the bosses of weapons makers who are raking in the billions, literally
As military stocks become the new darlings of mainland Chinese investors, company bosses like He Zenglin are amassing fortunes to join the growing ranks of China's US-dollar billionaires.
He, chairman of Xi'an Tian He Defence Technology, which is listed on the Nasdaq-style ChiNext market in Shenzhen, saw his personal net worth soar 10 per cent to US$1.1 billion on Tuesday when shares of the air-defence system maker hit the daily upper trading limit of 10 per cent.
Trading of Tian He was suspended yesterday.
The frenzied buying by retail investors on the A-share market has generated dozens of billionaires - on paper at least - in recent months despite warnings from the securities regulator that the bull run could end in tears.
"Investors are chasing stocks that have great stories to tell," West China Securities analyst Wei Wei said. "It's not unusual that more and more company bosses have become billionaires as their stock prices surge."
According to Forbes business magazine, the A-share rally created about 30 new mainland super-rich whose personal fortunes exceeded the US$1 billion mark each in the past two weeks.
Unlike state-owned blue chips traded on the Shanghai Stock Exchange, the SME board slated for companies with fewer than 100 million shares, and the ChiNext market for startups, are the main nurseries of billionaires.
He Zenglin, 44, founded Tian He in 2004 and the company raised 721.5 million yuan (HK$914,000) on the ChiNext market in September last year through an initial public offering.
As of Tuesday, its share value had soared five times compared with a 70 per cent gain in the Shenzhen Composite Index.
Mainland investors began their stock buying frenzy in November, buoying up the benchmark indicator by 90 per cent .
Founders and top executives of newer firms were the top beneficiaries of the buying euphoria.
Zhou Qunfei, 45, founder of touch-screen maker Lens Technology, has become China's richest woman since the company made its debut on the ChiNext market on March 18. As of yesterday, her personal net worth was valued at 60 billion yuan.
Military stocks were driven by investors' confidence in China's increasing military budgets and greater emphasis on research and development.