As world leaders and finance officials gathered in Beijing for the Belt and Road Forum for International Cooperation from May 14 - 15, investors are expecting this high-level summit convened by Chinese President Xi Jinping will generate fresh momentum for the central government’s Belt and Road Initiative.
Since the Belt and Road Initiative was proposed three years ago, the Chinese government has signed agreements with more than 40 countries and international organizations to strengthen trade links. During the 2-day forum, China will sign a range of new agreements with B&R countries on infrastructure development, energy, manufacturing, trade and investments that will provide a major boost for the global economy, driving greater cross-border collaboration.
Investors can profit from the market’s renewed focus on B&R if they invest in companies in the infrastructure construction sector. However, investors should be selective and buy only infrastructure construction companies with strong overseas capabilities that are recognized market leaders. Three investment strategies stand out.
The first investment strategy is focused on companies in the engineering machinery, rail equipment and electricity-related infrastructuresectors. Market leaders such as Sany Heavy Industry, Shanghai Electric Power and Haixing Electric Power are recommended.
The second strategy favors companies with state-owned, as they are in a better position to win infrastructure construction orders. Market leaders including China Communications Construction, Power Construction Corporation of China and China Railway Construction.
The third investment strategy is to select stocks based on geography. Infrastructure companies that are headquartered in Xinjiang and Fujian provinces should be favored.