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Mania for China’s hemp-related companies prompts stock regulator to crack down

  • Hemp-related companies listed in Shanghai, Shenzhen and Hong Kong have enjoyed a stellar rise so far this year, but can it last?
  • China is the world’s largest hemp producing country and the biggest exporter of hemp paper and textiles

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A group of workers harvest hemp at a farm near Beijing. Photo: Alamy
Louise Moon

Chinese cannabis-related stocks have been getting way too high this year for Beijing’s taste, prompting a crackdown to control the investor mania.

Marijuana growth and consumption is illegal in China, but cultivation of hemp is allowed in the southern province of Yunnan and in the northern province of Heilongjiang, which legalised the trade in 2010 and 2017 respectively.

Though tightly controlled, China is the world’s largest hemp producing country and the biggest exporter of hemp paper and textiles, according to official figures. Hemp contains just a trace of psychoactive component THC, and is used industrially in things like clothing, paper and seed products.

The Shenzhen-listed shares of Shanghai Shunho and Jilin Zixin Pharmaceutical were among those that have rocketed this year as investors sought out companies with cannabis ties.

Mainland investors are “very focused on that turf,” said Kenny Tang Sing-hing, chief executive of China Hong Kong Capital Asset. “It is short term speculative trading.”

Tang cautioned that the sector remains just a “concept” in Hong Kong, with only a few listed companies related to hemp.

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