(Jan 13): Shares of Chinese companies tied to commercial rocket production tumbled after they cautioned that a recent rally had outpaced underlying fundamentals.
Hunan Aerospace Huanyu Communication Technology Co plunged as much as 20% on Tuesday (Jan 13) while China Spacesat Co dropped as much as 10% before rebounding. Goldwind Science & Technology Co, which has a stake in rocket startup LandSpace Technology Corp, fell more than 13%.
China Aerospace Times Electronics Technology Co, CICT Mobile Communication Technology Co and Beijing LeiKe Defence Technology Co were among those that issued warnings Monday night on excessive gains in shares.
“The long-term prospects for the commercial aerospace industry are very promising, but the market in the short term is mainly driven by speculative sentiment,” said Fu Zhifeng, chief investment officer at Shanghai Chengzhou Investment Management Co. Based on companies’ announcements last night, it seems regulators are trying to cool down the speculative fervour, he said.
The company warnings follow sharp rallies in the stocks, fuelled by optimism over stronger policy support for the commercial space sector and expectations of technological breakthroughs. Hunan Aerospace shares have jumped more than 90% since the start of December while China Satellite Communications Co has surged 135%. In comparison, the onshore benchmark CSI 300 Index advanced around 5% since Dec 1.
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There are “potential risks of overheated market sentiment and irrational speculation,” Geovis Technology Co, which develops digital earth application platforms, said in a filing. “We urge all investors to be mindful of secondary market trading risks, make rational decisions and exercise prudent investment judgment.”
Despite the warning, Geovis shares rose as much as 20% on Tuesday, underscoring resilient investor appetite. Some stocks also pared losses after an initial knee-jerk reaction.
Investor sentiment has been buoyed by frequent attempts by Chinese companies to launch reusable rockets into space, as well as reports that the nation submitted its largest-ever centralised international application for frequency and orbital resources last month.
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