As floods hit Henan province, investors get respite with stocks spared from major sell-off
- 91 listed stocks from province have a combined market value of about US$19.2 billion, or 1.6 per cent of onshore market capitalisation
- Reactions to shares of firms based in the province appear to be muted so far, as Nomura sees limited impact in capital market
As Henan counts the huge economic damage from unprecedented flooding, stock investors are finding the market reactions far from disastrous as companies with operations in the central Chinese province ploughed through the crisis.
In and around the capital Zhengzhou – home to the nation’s biggest pig breeder and iPhone assembly lines – some of the listed companies in the province have so far reported limited disruption to their production facilities, according to several stock exchange filings.
Jiaozuo Wanfang Aluminum Manufacturing, whose factory is located about 50 minutes from the capital by high-speed train, fell 2.3 per cent from near a two-month high to 8.54 yuan in Shenzhen trading. It halted production on Wednesday.
The firm, the biggest victim so far as the flood crippled transport and communications, has partially resumed operations on Thursday, it said in a filing, while the economic losses cannot be estimated for now.
Muyuan Foods, the biggest pig breeder, said its business was operating as usual in the face of those challenges. The stock climbed 0.14 per cent to 50.73 yuan on Thursday, after losing 3.5 per cent Wednesday.
02:09
Death toll continues to rise after floods in central China that displaced over 1.2 million people
“The flooding is expected to have a limited impact on the capital market,” analysts at Nomura Holdings said in a report. “If the rainfall strengthens again, the unusual weather will probably curb supply of agricultural and industrial goods within the year, adding to inflation pressure and compounding the government’s efforts to stabilise prices.”