Stocks in Singapore Which Can Benefit From Possible Economic Stimulus in China

Investors who are bullish about China’s economic future have much to celebrate this week as China’s Premier Li Keqiang recently promised that the country’s government will try to strike a balance between growing the economy and pushing for more structural reforms such as the crackdown on corruption.

During a news conference held yesterday, Mr. Li stated that the Chinese government has not been using massive stimulus over the past few years to push for economic growth. He also added that the government still has plenty of tools in its toolkit at its disposal if it wanted to stimulate China’s economy.

Given what Mr. Li has shared, it’s perhaps worthwhile to think about the companies that are likely to benefit from any possible stimulus policies from the Chinese government.

Among the Straits Times Index’s (SGX: ^STI) 30 constituents, there are three companies which might get to enjoy tailwinds if China does decide to implement a large stimulus package.

The local logistics operator

China is Global Logistic Properties Ltd‘s (SGX: MC0) largest geographical market. The company, which provides logistics facilities and services, is the leading provider of modern logistics facilities in China with 8.8 million square metres of logistics floor area (as of 31 December 2014). For perspective, Global Logistic Properties’ largest competitor only has 1.5 million square metres of floor space.

If China were to put in place stimulus packages aimed at increasing trading activity in the country, it’s likely that it would have a positive impact on Global Logistic Properties’ business.

Betting on Chinese tourists

Although Resorts World Sentosa owner Genting Singapore PLC (SGX: G13) does not operate directly in China, its dependence on the influx of Chinese tourists is quite obvious.

A stimulus package from China’s government might boost the wealth of the Chinese population on the whole, thus boosting their ability to travel more frequently. That said, the government’s on-going efforts on the crackdown on corruption might prevent Genting Singapore from experiencing the full benefit of a stimulus package from China.

Eating more and cooking more

Although the following firm’s probably more well-known as a palm oil producer with large plantations of the fruit in Indonesia and Malaysia, Wilmar International Limited (SGX: F34) is actually one of the leading cooking oil manufacturers in China.

If China were to implement a stimulus programme, consumption of fast-moving consumer goods (which includes cooking oil) may well increase, thereby leading to stronger demand for Wilmar’s consumer products.

Foolish Summary

It’s important to note here that just because the Chinese government mentioned that it has the ability to start a stimulus plan does not necessarily mean that it is going to do it. Investing in individual companies based solely on the prediction of macro events happening can be dangerous.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns Genting Singapore and Wilmar International Ltd.