The "One Belt, One Road" program China launched four years ago to strengthen rail, road and maritime links with trading partners in Asia, Africa and Europe has become an investment theme for some stock pickers even as it remains a work in progress for most infrastructure investors.
Two months after Chinese President Xi Jinping pledged an additional $125 billion in financing, over and above the more than $50 billion already invested, some money managers contend the market is underestimating the lift that companies financing or engineering these projects could get from that coming wave of infrastructure spending.
The market has yet to discount the earnings boost "the largest economic policy the world has ever seen" will provide for key banks and insurers, trading companies and e-commerce players, in addition to firms directly tied to construction and engineering, predicted Douglas Morton, a London-based senior vice president and head of research, Asia, with Northern Trust Capital Markets.
Bank of China Ltd., Ping An Insurance (Group) Company of China Ltd., HSBC Holdings PLC and Standard Chartered PLC are among the firms poised to benefit, said Mr. Morton. Others likely to enjoy a tailwind include China Communications Construction Co. Ltd., CGN Power Co. Ltd., General Electric Co., Siemens AG and Alibaba Group Holding Ltd., he said.
Brendan Ahern, chief investment officer of New York-based Krane Funds Advisors LLC, said his firm's KraneShares exchange-traded funds business will launch a One Belt, One Road ETF — benchmarked to MSCI Inc.'s recently introduced Global China Infrastructure Exposure index — by the end of August. In an interview, he predicted interest from institutional and retail investors alike.