Emperor Stocks Make Surge on News Xi Has Indefinite Reign

Speculators in China jumped on stocks that have the world emperor in their name Monday, after a Communist Party ruling set the stage of current president Xi Jinping to remain in office.

On Sunday, the party proposed that a constitutional clause be removed. The clause limits presidential service to just two terms, boosting prospects that Xi will remain in power after his almost certain second term that will start in March.

Shenzhen Emperor Technology surged close to 10% during morning trading, and Anhui Yingjia Distillery, whose name in Chinese includes “greeting the emperor’s carriage, increased by 4%.

Harbin VITI Electronics, which has the words that mean “powerful emperor” in the company name, was up more than 7%. A broader market in China rose less than 1%.

One analyst who is based in Shanghai said that it is nothing more than stirring the pot and has nothing to do with any fundamentals and expects that those shares involved would be dumped quickly.

The boost in stocks using the “emperor” is not the first play of its type by speculators in China.

In October of last year, the Hangzhou Huning Elevator Co, an elevator maker that is very little known across China, has a name that is similar to the theoretician of the Communist Party in China Wang Huning, surged following Wang’s promotion to the top political body in China.

In November of 2016, when headlines in the news pointed to a likely victory by Republican nominee Donald Trump in the U.S. presidential election, shares in Wisesoft Ltd jumped since the Chinese name is similar in sounding to “Trump’s big win.” At the same time, Yunan Xiyi Industrial, has a similar sound in Chinese to “Aunt Hilary,” and dropped at that time.

Bets on “concept” stocks, a popular practice across China, have underscored the continued influence of speculators who are working only on the short term, despite a campaign by government regulators against trading considered pump and dump ahead of the inclusion during June of the A-shares of China in MSCI indexes.

The possible tenure extension by Xi could help to ensure more political stability while being good for promoting wider and deeper economic reforms.

The knee-jerk response of the proposed change to the constitution already is showing signs of being very short-lived.

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