Concept stocks related to Beijing, Tianjin and Hebei province, amid rumors that the three areas will be integrated into a single zone, have become hot picks in the mainland market lately. The Hong Kong Economic Journal’s EJ Tactics column looks into this trading theme and searches for related plays listed in Hong Kong.
Several models of the North China integration are being floated around. One possibility is a dual-core city with a bunch of satellite cities. Setting up a mini capital outside Beijing to alleviate the high density in the premier metropolis is another.
A more practical plan, however, is to move certain non-core government services and industries out of Beijing’s central business district to ease the capital’s traffic congestion and overcrowding problems. More living space would be created if certain portions of the working population are transferred to second-tier regions.
Under the so-called Beijing, Tianjin and Hebei master plan, the capital will focus on certain core functions, including politics, culture, international exchange, technology and innovation, while its other roles will be diverted to peripheral regions.
There is also talk about establishing a free-trade zone in the region either by merging the separate proposals submitted by Tianjin and Hebei province or approving both plans together.
According to mainland media, the government is also considering the integration of marine, air and land transport systems across Beijing, Tianjin and Hebei. By 2020, a regional transportation network will be created, linking the highway systems, transportation hubs, transport management, transport services and logistics of the three areas.
Meanwhile, Beijing and Tianjin will combine their port operations and management this July. Under a pilot scheme, import and export enterprises will no longer be required to file separate documents the two cities.
Mainland brokerages are avidly following the developments. Some say cement makers, regional port operators, town planning and construction firms, as well as pollution solution providers will bring decent investment opportunities.
Tianjin Port Development Holdings Ltd. (03382.HK) could be potential investment target under this trading theme. The company’s throughput ranked fourth globally. The port itself is just 120 kilometers away from Beijing, and a third of its throughput volume is linked to the capital.
Last year the two cities signed a collaboration agreement focusing on economic and social development and strengthening cooperation in logistics.
The deal is expected to enhance Tianjin Port’s status as a gateway for Beijing and a regional hub for international shipments in the northern part of the Bohai Economic Rim.
Cooperation in commerce and tourism services among the three areas has been increasing in recent years. The number of Beijing tourists departing Tianjin for overseas tours doubled to 170,000 last year from 2012.
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