HONG KONG -- Shares of environment-related companies have soared in anticipation of the Chinese government's "public-private partnership" scheme boosting private investment in infrastructure projects.
Since mid-September, speculation has been circulating. The online edition of Chinese newspaper Securities Times reported, "The PPP's new investment project looks to be announced shortly."
Buy orders flooded in for shares of water treatment-related companies. For example, shares of Heilongjiang Interchina Water Treatment surged 8% from the day before on Sept. 6 on the Shanghai Stock Exchange.
The PPP scheme grabbed the global spotlight during the Sept. 4-5 Group of 20 summit in Hangzhou, Zhejiang Province. Although the initiative to attract private investment in government-led infrastructure projects was floated in 2013, the term "PPP" became popular later, in about 2015.
Among the topics on the meeting's agenda was easing of regulations related to the procurement of funds for environment conservation projects, underlining Beijing's high interest in the environmental issues. The PPP scheme is considered a vehicle to ramp up investment in infrastructure related to environment protection. Amid shrinking private investment in China, investors are assuming that the authorities aim to draw in such investment in infrastructure projects through PPP as a last resort.
However, the PPP scheme has been criticized in Chinese stock markets for its lack of a detailed plan. The purchase of shares is, at present, based only on expectations for projected increases in private investment.
As for the PPP's effect on pushing up private investment, an official of a Chinese brokerage house said, "PPP will only serve to increase the government investment if it is a partnership in which the proportion of private investment is small."