HONG KONG -- Despite a sluggish start to the year for shares in Hong Kong, there is one young sector that is showing big gains in the first week of 2008: Olympic "theme" stocks.
Traditionally, theme stocks have been defined as those companies whose earnings investors think will get an uplift from the mass of tourists flooding into Beijing in August, such as Air China (AIRYY), for the summer games.
Recently, however, the sector has expanded to include companies that are more loosely related to the games, say market participants. The speculation has created a rush to find the next hot stock, and propelled some of the original theme stocks into orbit.
"Investors are chasing the share prices of any stock that is related to Beijing, or with the word Beijing in the name," says Richard Lee, an analyst at Core Pacific Yamaichi in Hong Kong. "Even second-liners, like Beijing textile companies which are less relevant to the Olympic games, are up strongly."Lee says that the key companies benefiting right now from the buying frenzy are mainly sportswear makers and travel companies, but others such as Beijing Media (BJGMF), are also favorites. While the Hang Seng has declined 2.5% so far this year to 27,112, this increasingly arbitrary group of companies has posted stellar gains, in some cases hitting record highs. For example, China Dongxiang (CDGXF), a maker of sportswear in mainland China, has risen 7% so far this year to HK$6.20. The shares listed last October and hit an intraday record high of HK$6.38 on Monday.