The Chinese government's announcement to build a new economic zone on the outskirts of Beijing spurred sudden interest in property investment in the region, but analysts are less upbeat about the overall contribution from the new megacity.
"There are some direct beneficiaries due to their meaningful exposure to the area, but the net impact nationwide should be quite small by our estimate," wrote strategists at the Bank of America Merrill Lynch in a note released on Wednesday.
While analysts expect a boost to infrastructure investment in what is now still a sleepy backwater, the focus on the Xiongan New Area, which will take on some functions of the capital city, will also be at the expense of other cities.
"In our view, the Xiongan New Area is designed to address some specific issues that Beijing faces and it does not herald another round of massive infrastructure build out in China. Given the government's desire to control debt growth, we expect the investment amount earmarked for Xiongan New Area could be diverted from elsewhere mostly," they added, singling out the
Analysts at Nomura are just as lukewarm about the new economic zone.