Brief Growth Ideas: China’s Rmb25trn Infrastructure Spending: Bond Issuance, Infrastructure Machinery and Construction and more

In this briefing:

1. China’s Rmb25trn Infrastructure Spending: Bond Issuance, Infrastructure Machinery and Construction

1. China’s Rmb25trn Infrastructure Spending: Bond Issuance, Infrastructure Machinery and Construction

Infrastructure machinery and construction companies will benefit from the escalation of China’s infrastructure spending in this year, in our view. Various provinces and municipalities have announced an aggregate infrastructure spending plan of over Rmb25trn. A 217% YoY increase in the issuance of new special purpose bonds in Jan-Feb 2020 by the local governments has already provided the sign of funding support, and we expect more bond issuance in the rest of the year. 

We believe Lonking Holdings (3339 HK), Zoomlion Heavy Industry S A (000157 CH) and Sany Heavy Industry Co., (600031 CH) are the key plays under government’s infrastructure spending. Should the government speed up its railway investment plan, China Railway Group Ltd H (390 HK) and China Railway Construction Corp (1186 HK) are also set to reap the benefits.