Hainan-based companies are bouncing as HNA deal, tourism measures signal stronger policy support amid Covid-19 crisis
- An index tracking the performance of Hainan-based companies rose 14 per cent this month through March 11 to a 10-month high
- China announced new measures for spur Hainan’s tourism industry suffering from coronavirus outbreak
The Hainan Composite Index, which tracks 26 local companies, has rallied 14 per cent this month through March 11 to a level not seen since April 30, according to Wind Information. The CSI 300 Index, which tracks China’s biggest companies on the Shanghai and Shenzhen stock exchanges, rose 0.3 per cent in that time.
The Hainan government is leading a working committee with representatives from the civil aviation administrator and China Development Bank to help manage HNA Group, after years of debt-funded expansion led to a liquidity crunch, while the coronavirus outbreak slammed the airline business, one of the group’s biggest assets.
The government's management of credit risks in HNA Group is one of the reasons for the rally, according to Wang Jianhui, general-manager of research department at Capital Securities based in Beijing. “The gain is also related to the improved coronavirus situation in the province.”
Hainan leads the nation on the epidemic situation, with no reported infections since February 19, allowing companies to resume production faster than in other affected regions. Haikou-based Hainan Airlines said this week it will resume all flights into Hainan from Chinese cities from March 15.
Lanhai Medical Investment’s share price has surged 73 per cent, Hainan Ruize New Building Material climbed 43 per cent and Hainan Strait Shipping advanced 24 per cent, making them among the biggest winners this month, according to Wind. Hainan Infrastructure and HNA Innovation added about 20 per cent.
The news got better on Wednesday after the National Development and Reform Commission (NDRC) -- China’s top economic planning unit -- announced new measures aimed at reviving Hainan’s tourism industry ravaged by the viral outbreak. China aims to set up a free-trade zone on Hainan Island by 2020 and a free-trade port by 2025.
In the NDRC statement on Wednesday, the Hainan government said it will stimulate local and international travels to the island by holding various events. It will also help stabilise employment by returning partial unemployment insurance fees for the whole year of 2019 and provide companies with funds to support job training.