Stocks of companies in agriculture-related sectors may coast on recent announcements that the government will expedite development of modern farming in China, said analysts. They further said more than 80 companies listed in Shanghai and Shenzhen, and engaged in farming, agricultural services, food processing and cold-chain logistics, may all benefit. According to Shanghai WIND Information Technology Co Ltd, a financial information provider, about 40 agri stocks rallied last week, gaining 3.4 percent on average. This week, they will likely extend gains…Full Article: Mar 2016

Key Point

  • According to various industry experts, Chinese agribusinesses that focus on crop seeds, biotechnology, automated/high-tech, farm machinery, and cold chain logistics will likely benefit the most from the government’s push to modernize the sector.

ChinaAg Comments

  • From 12 June to 8 July 2015, China’s stock exchanges in Shanghai, Shenzhen, and Hong Kong plummeted after months of growth. During that time, Shanghai’s SSE Composite Index dropped -32.1%, while Shenzhen’s SZSE Composite Index declined by -40% due in part to substantial losses in Shenzhen’s NASDAQ type ChiNext board. Hong Kong’s Hang Seng Index, which is more open to foreign investors than its mainland counterparts, declined by only -13.8%. Lastly, the CSI 300 Index, an economic bellwether and China’s answer to the USA’s Standard & Poor’s 500, notched a -31.3% drop.
  • ChinaAg analyzed the stocks (from 12 June to 8 July) of 51 Chinese food and agricultural enterprises that were publicly traded in Shanghai (8 listings), Shenzhen (14 listings), Hong Kong (24 listings), New York (4 listings), and Singapore (1 listing). The poorest performing agricultural enterprises during the stock market decline were those engaged in meat (-47%) and animal feed (-42.4%) production. The next worse performing enterprises were seed companies whose losses during the stock market decline averaged nearly -40%, though losses would approach -50% if not for one well-performing NYSE-traded seed company (i.e. Agria Corporation at -8.3%).The best performing enterprises during the stock market decline were those in the retail industry (e.g. supermarkets, hypermarkets, etc.) and averaged only a -21% loss.

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