Stocks boosted by Tianjin FTZ plans

Stocks related to a second potential free trade zone (FTZ) in the mainland rose by the daily limit on Tuesday, following a newspaper report revealing that the Tianjin Municipality's Binhai New Area had applied to open an FTZ shortly after the launch of the China (Shanghai) Pilot Free Trade Zone in late September.

Shares in Tianjin Marine Shipping, Tianjin Port Holdings and a few other companies with connections to the potential FTZ in Tianjin rose by the 10 percent daily limit, greatly outperforming a 0.85 percent fall in the benchmark Shanghai Composite Index on Tuesday.

The stock rally came after the China Securities Journal published an article Tuesday about Tianjin's FTZ application.

Tianjin's Binhai New Area has submitted all the relevant paperwork for the FTZ application, and there are high hopes of gaining approval from the central government, Zong Guoying, the head of the area, was quoted by the report as saying.

As early as 2008, the State Council said in a draft plan mapping out a vision for reforms in Binhai New Area that the area was seen as a potential location for a pilot FTZ.

Fixed-assets investment in the area is expected to hit 500 billion yuan ($81.95 billion) this year, according to Zong, who also forecast 15 percent growth in investment next year to bring the total to at least 570 billion yuan.

The capital injection will be used to fund infrastructure construction, such as seaports, airports and energy facilities, as well as information technology in the 2,270-square-kilometer area, according to the report.

Without revealing the exact sources of funding for the investment, Zong said specific policies are being discussed by local authorities to ensure capital inflows, with an emphasis on private capital.

Efforts by the Global Times to contact the general office of Binhai New Area to seek confirmation of the report were not successful by press time.

Although the stock surge was reminiscent of investors' enthusiasm after the central government announced the approval of the Shanghai pilot FTZ in late August, some economists said the Tianjin FTZ, if approved, is unlikely to have as big an impact as the Shanghai FTZ.

Tianjin is not comparable with Shanghai in terms of geographic advantages and development levels, so an FTZ in the North China city will have less implications, Lu Ting, chief China economist with Bank of America Merrill Lynch in Hong Kong, told the Global Times Tuesday

The Shanghai FTZ is more than just a free trade zone offering preferential policies and measures to lure investment - it is also a testing ground for the country's major financial reforms and innovations, Chang Jian, chief China economist at Barclays Capital in Hong Kong, told the Global Times Tuesday.

"There might be a number of regions lining up to gain approval to establish free trade zones, but in terms of the implications for the country's deepened reforms, there won't be anywhere to equal [the importance of ] Shanghai," Chang said.

However, Zong said the potential new FTZ neighboring Beijing would have promising prospects.