As listed firms set foot in industrial hemp field, related stocks gain
Published: Mar 27, 2019 10:18 PM

A cannabis plant growing in the suburbs of Kunming, capital city of Southwest China's Yunnan Province. Chinese hemp grows 4-5 meters taller than its foreign counterpart, a Chinese expert said. Photo: Courtesy of Hu Jiangmiao

A number of A-share stocks related to industrial hemp planting have surged in recent days, reflecting the Chinese capital market's frenzy over a new investment opportunity. 

The shares of Harbin Pharmaceutical soared Wednesday by the 10 percent limit to close at 5.96 yuan, after the National Business Daily reported that the company planned to plant 15,000 mu (1,000 hectares) of industrial hemp in Heihe, Northeast China's Heilongjiang Province.

Other hemp-related stocks also gained. For instance, Shunhao surged by the daily limit and closed at 18.01 yuan on Wednesday. Huasheng rose 9.98 percent to close at 8.93 yuan. 

Industrial hemp concept stocks have been going strong for a while. Shunhao stock has appreciated 331.9 percent since January, the China Securities Journal reported. As a relatively new concept stock in China, industrial hemp issues gained great attention from the capital market after Chinese regulators legalized industrial hemp planting in Heilongjiang and Southwest China's Yunnan Province. 

Even obtaining a planting license for industrial hemp could stimulate a firm's share performance. Hemp's extractive cannabidiol can be widely used in textiles, health food, beauty products and medicines. A lot of Chinese manufacturers are applying for planting licenses as they target this promising market. 

"It cannot be denied that there's capital hype behind this. Even with a promising market, there's still a legal risk and the profit growth from hemp products might not meet investors' expectations," an employee of a securities company told the Global Times on Wednesday.

As for the legal risk, hemp also contains psychotropic materials that are strictly regulated by most countries. 

The industrial hemp concept stocks' jump followed media reports saying that the China National Narcotic Control Commission made an official statement about strengthening controls on industrial hemp applications on March 13. That announcement sparked interest among investors.

Shunhao said in a statement sent to the Shenzhen Stock Exchange on Wednesday that its "hemp-related business could face policy-changing risk, legal risk, management risk, natural risk, R&D operational risk and cooperative uncertainties." 

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