The next move in the ongoing trade war dance between China and the US could signal a construction blitz in China’s regions, and that means steel.
Bloomberg has reported that the central government in Beijing has loosened rules restricting construction from local governments — possibly signalling the start of more construction activity in the country.
The Chinese government had curbed construction from regional governments as it sought to remodel its economy as a consumption economy and it started to worry about the debt accrued to fuel the previous construction blitz.
But, potentially worried about the ongoing effects of a trade war with the US, Beijing has sought to stimulate the economy through construction.
News of more construction in China is enough to send iron ore miners into a tizzy, as iron ore is the key ingredient in steel.
While the usual suspects will rejoice, there’s also scope for smaller players such as Fenix Resources (ASX:FEX).
It’s currently working its way to producer status, and should be able to take advantage of the market in the short-to-medium term as its ore only requires crushing and screening before being trucked off to port.
But iron ore miners aren’t the only ones to benefit from the loosening of rules around construction in China, with a swag of Chinese stocks benefitting in yesterday’s trade.
China Railway Group Ltd. was one of the standout stocks Tuesday, rising 7.8 percent in Hong Kong, the most since July 2018.
China National Building Material Co. advanced 7.1 percent and Anhui Conch Cement Co. rallied 4.8 percent.
China International Capital Corp. jumped 7.5 percent, the most since November.
This content is produced by Star Investing in commercial partnership with Fenix Resources. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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