Jinzhou Port has warned investors repeatedly that its share price is too volatile and its valuation “too high” compared with peers.
Shares in Jinzhou Port pulled back on Tuesday and Wednesday, but are still up 60% in two weeks.
Xinjiang Tianshun Supply Chain — a logistics company for bulky goods in far northwestern Xinjiang, which directly shares a 60-mile border with Russia — had also jumped 95% on the Shenzhen Stock Exchange over the past seven sessions by Monday. The stock retreated on Tuesday and Wednesday. But it’s still up nearly 60% since the Ukraine war.
Even toll road operators and rail freight service firms have surged since the war began. Heilongjiang Transport Development, a main operator of highway tolls in northeastern Heilongjiang — which shares a 1,850-mile border with Russia, has climbed 21%.
Changjiu Logistics, whose parent firm operates direct freight trains between northeastern China and Russia, also jumped 14% during the same period.
“Some Chinese investors believe that Russia now has no one else to turn to but China,” said Hao Hong, managing director and head of research at BOCOM International. “So they believe that China stands to gain from its trade with Russia.”
It looks “quite possible” that some trade between China and Russia will increase following Western sanctions on Russia, especially in commodities, he added.
“China needs commodities and Russia may have to sell it cheap,” Hong said. “One ancient Chinese idiom is that when two clams fight, the fisherman stands to benefit.”
Who is behind the frenzy?
The rally is being driven by small retail investors, who make up more than 80% of China’s stock market turnover, according to data from Shanghai and Shenzhen stock exchanges.
Purchase orders of less than 40,000 yuan ($6,338) worth of stocks, or fewer than 20,000 shares, account for about 40% of the money flowing into the Sino-Russian trade sector, according to Chinese financial data service East Money Information on Tuesday.
Medium-sized orders that are below 200,000 yuan ($31,692) or 100,000 shares make up about 36%.
Despite the enthusiasm shown by small traders, experts warn that it is too early to bet on increased trade between Russia and China. Beijing has not rushed to help Russia after its economy was slammed by sanctions from all over the world, and will be wary of risking its much bigger trading links with Europe and the United States.
Experts tell CNN Business that small investors in China might be unaware of the long-term implications of Western sanctions.
There is a “disconnect between a legion of retail investors operating in a limited information environment, and the government’s limits to friendship with Russia,” said Jeffrey Halley, senior market analyst for Asia Pacific at Oanda.
“Clearly, the man on the street believes that China-Russia trade will not be impacted by ‘American’ sanctions, especially in light of the recent ‘deep’ partnership agreement between the two countries,” he said.
“Unfortunately, China also does a huge amount of business with the rest of the world, and there may be limits to even China’s diplomatic largesse,” he added.
But for China, Russia matters a lot less: Trade between the two countries made up just 2% of China’s total trade volume. The European Union and the United States have much larger shares, accounting for 13.7% and 12.5% respectively, according to Chinese customs statistics for last year.
China also faces its own economic challenges, which could make it harder for Beijing to significantly boost trade with Russia.
“In my view, betting on a significant pick-up on China-Russia commodity trade could end in tears,” said Stephen Innes, managing partner at SPI Asset Management.