This afternoon, Wuling Motors Holdings Ltd, a Hong Kong listed company, suddenly saw its share price soar.
At one point of time, it went up 120%, before some rationality kicked in:
All these took place in a matter of minutes – what exactly happened?
An important political signal
Well, it went back to Premier Li Keqiang’s speech at the end of the National Congress Annual Session last week. Premier Li mentioned that 600 million people in China has an average monthly income of CNY1000 (US$140).
The sent shock waves across the urban middle class – many couldn’t believe that half of the nation is that poor. CNY1000 is not even enough to buy a dress in Beijing CBD.
After this speech, there is intensive coverage about 地摊经济 (hawker economy). Premier Li even went to the provinces and openly praised the dynamism hawkers bring.
For a long time, hawkers have been oppressed in China, as they ‘destroy the city’s tidiness and appearance”. The powerful City Administration Bureau – a law enforcement agency – counts dismantling hawker stalls as one of their key activities. Conflicts between them and hawkers often turn violent:
Therefore, the political signal Premier Li sent could not be more obvious.
How about Wuling then?
So what does this have to do with Wuling Motors? You might say.
Well, first a bit of background of Wuling. Its light (and extremely cheap) commercial vehicles have been extensively used by small merchants in China. Wuling’s mini-van series, some of which are retailing at less than CNY 30k (US$4.2k), have been so loved by small businesses that it earned a nick name 赚钱神器 (divine money maker).
It has been around as the best seller in China for a long time, in 2010 Forbes had the following cover story:
So linking it back to Premier Li’s message, coincidentally Wuling launched a new model of vans ‘specifically designed for hawkers”:
And today it launched a promotional article through its WeChat account:
It says: “the main force of hawker economy, upgraded for China VI emission standards, one touch to open the wings, open to sell, best for low cost entrepreneurship, good quality and peace of mind.”
That sent the stock price soaring.
Amazing isn’t it? Stories like this happen every day in China.
Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected]