Chinese President Xi Jinping’s plan to make China a football superpower "is winning over fans in an unlikely place: the nation’s $7.7 trillion stock market," according to BLOOMBERG.
Nine listed companies with ties to the country’s football league have surged an average 158% since the Chinese president "first signaled plans in March 2014 to revive a sport plagued by match-fixing and an 82 ranking in FIFA’s international league." The gains, which outpaced the benchmark index by 42 percentage points, "have accelerated in the past two months as Xi outlined a 50-point road map" for football reform and put a member of the ruling Politburo in charge of the effort.
For Xi, the campaign "is part of a wider push to both curb corruption in the world’s second-largest economy and project Chinese power on the international stage." Ledman Optoelectronic Co., a partner of China’s top football league, and Beijing's Leshi Internet Information & Technology Co., which broadcasts league games through the Internet, "are among Minsheng Securities Co.’s top picks for investors who want to bet on a turnaround for the sport." Minsheng Securities sports-industry analyst Tao Ye:
“To invest in China, you need to follow policies. Soccer reform is getting a big push from the top and that’s why relevant stocks have gained so much."
PERSONAL TOUCH: With football reform, Xi "is mixing his personal affection for the game with a zeal for fighting corruption that has ensnared more than 100,000 Communist Party cadres." Beijing Sport University sports culture professor Ren Hai said that the president’s interest in football "has 'a direct link' to the release of the reform plan." Ren: "It’s much faster than expected." Stock investors "are betting on more good news to come." Ledman Optoelectronic "has jumped 336 percent over the past 12 months on the ChiNext board of smaller companies." Leshi Internet has surged 147%, while Jiangsu Sainty Corp Ltd., whose parent owns a Super League club, has climbed 128%. Bosera Asset Management Co. strategist Yu Jun said that the rally in football-related stocks "may not be sustainable because valuations have surged and it’s too early to judge if the reforms will be successful." Yu: "It’s difficult to tell at the initial stage whether it’s a good investment. There are lots of optimistic expectations and huge room for imagination" (BLOOMBERG, 5/4).
