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Countdown to iPhone 6 Sends China's 'Apple Concept' Stocks Soaring

NEW YORK (TheStreet) -- Stock investors in China have been betting on a big second half for Apple (AAPL - Get Report) by snapping up shares in the company's Chinese suppliers and other makers of smartphone parts.

So-called "Apple concept" stocks on the Shenzhen and Shanghai exchanges have risen sharply since last week on expectations of an impending ramp-up for production of a new iPhone 6, an updated iPad and the iWatch.

The market has also gotten behind companies that make or supply parts for electronic gadget screens including so-called "sapphire glass" screens, such as the Shenzhen-listed companies Roshow Technologies, Jin Fu New Materials and Anjie Technology.

If Apple switches to sapphire glass for screens, as many tech sector observers expect, other smartphone makers with factories in China are likely to follow suit, according to a GF Securities report. This "copycat effect" could push demand for sapphire glass screens to three times what Apple will need for new iPhones, the report said.

Over the past week, Roshow's price has climbed 14%, closing Wednesday at 25.95 yuan a share, while Jin Fu jumped 20% to 12.72 yuan. Shares in Anjie, a contractor for Apple supplier Foxconn (FXCNF), closed at 37.19 yuan after climbing 17% since last week.

Roshow recently announced a joint venture with privately held Apple supplier Biel Crystal -- a company accused of labor abuse leading to suicides last fall -- to make sapphire glass screens at a new factory. The companies have reportedly invested 500 million yuan and plan to launch production in August.

Other Apple concept stocks attracting investors include Shanghai-listed USI Electronics, whose shares rose 13% since last week to close Wednesday at 26.47 yuan, and Shenzhen-listed Tongfeng Guoxin Electronics, which saw its stock climb 5% to 40.90 yuan.

The current build-up to factory production of new Apple products is being closely followed by the business press in China, where supplying and assembling the company's wares employ millions of people in cities nationwide.

The state newspaper China Securities Journal on Wednesday said that as parts-stocking for the iPhone 6 and other new products begins, "various links in the entire Apple industry chain will get a significant boost (and) listed companies will see significant improvements in profitability."

The paper also predicted that "production of the new components will start in May, while final processing and assembly (of new Apple products) will start by the end of June."

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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