Caixin
Jun 04, 2020 04:25 AM
FINANCE

China’s Promise for Return of ‘Stall Economy’ Boosts Van Maker Shares

SAIC-GM-Wuling Automobile is launching a new model of cargo van that can be converted into a mobile vendor’s stall.
SAIC-GM-Wuling Automobile is launching a new model of cargo van that can be converted into a mobile vendor’s stall.

Investors rushed to buy shares of a local automaker that produces vans for mobile vendor stalls and booths after Chinese Premier Li Keqiang signaled encouragement for the return of street vendors in the recovery from the Covid-19 pandemic.

SAIC-GM-Wuling Automobile, a joint venture of SAIC Motor, General Motors and Liuzhou Wuling Motors Co. Ltd. based in Liuzhou, Guangxi, launched a new model of cargo van that can be converted into a mobile business stall using falcon-wing doors, the venture said Tuesday. Investors pushed the company’s Hong Kong-listed shares up as much as 120% Wednesday. The stock closed at HK$0.30 ($0.04), up 53% from Tuesday.

In the mainland A-share market, “stall economy”-related stocks also surged Wednesday. Shares of Zhejiang China Commodities City Group Co. Ltd., which operate the world’s largest small commodities wholesale market in Yiwu, and Yindu Kitchen Equipment Co. Ltd., a maker of commercial kitchen and dining equipment, jumped by the daily maximum of 10%.

The market was responding to a conversation between Li and some small business owners during an inspection Monday in the eastern city of Yantai.

“The street-stall and small-store economy is an important source of employment and human culinary culture — it’s part of China’s livelihood just as much as larger, high-end businesses,” Li said.

During the annual “Two Sessions” of China’s top legislature and political advisory group last month, Li praised the example of Chengdu, which generated 100,000 jobs overnight by setting up 36,000 street vending units.

The government’s posture marks a shift from pre-Covid-19, when many Chinese cities tried to crack down on street vendors as part of efforts to regulate retail markets and improve city appearance.

Since March, local authorities in many parts of China such as Chengdu and Shanghai have eased controls over mobile stalls. In the southwestern mega city of Chongqing, the government provides 10,000 square meters of commercial area free for small vendors. In Ruichang, a city in Jiangxi province, market administration staff called vendors in person, asking them to resume business in designated areas.

The favorable government policies to support the stall economy will boost the consumer industry in general by providing employment and spurring spending, Northeast Securities said in a note. The food and beverage sector, especially low-price consumer products, will benefit more obviously, but the lift to total retail sales won’t be significant, the brokerage said.

The surge in stall economy-related stocks reflects improving consumer sentiment during the recovery from the Covid-19 pandemic, but supporting street vendors is only one of many measures needed to solve the macroeconomic difficulties, and the impact is more short-term, said Yang Zhenyu, an analyst at Central China Securities.

Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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