Reports of an ambitious central government plan to revitalize the northeast provinces of China has focused the attention of many stock analysts and investors on the long-neglected heavy machinery producers, construction companies and equipment suppliers in the "rust-belt" industrial region.

An unnamed source at the National Development and Reform Commission said some of the top government officials and economic planners would meet shortly in Beijing to set the direction for a multi-billion yuan scheme to reshape the economic landscape of China's old and declining heavy industrial base spread across the three provinces of Liaoning, Jilin and Heilongjiang.

The report has sparked the imagination of stock analysts and investors who are keenly looking for a theme to enter a market that has just begun to regain its footing after crashing more than 50 percent from its peak in late 2008.

Indeed, the northeast, which has long been written off as a barren land for investment, has been the topic of countless market analysis and dominated stock exchange gossip in recent days.

Analysts agreed that the reported plan would boost the region's economy, and they are falling over each other to recommend stocks that are likely to gain from the projected government efforts.

They have drawn up a list of over 100 "concept" stocks that they expect to gain from the northeast revival plan. These companies include Ansteel, Jilin Jien Nickel Industry Co, Tianlun Real Estate Development Co Ltd, Northeast Securities, and FAW Car Co Ltd.

Shares of Liaoning-based steel producer Ansteel have cumulatively surged 17.6 percent in the past three days following the report. Its shares on the Shenzhen Stock Exchange rose 4.81 percent to close at 11.55 yuan yesterday, the highest in 10 months.

The shares of Jilin Jien Nickel Industry Co, the country's second largest producer of the non-ferrous metal nickel, rose 5 percent to close at 22.58 yuan yesterday.

"The northeastern region has abundant raw material resources, and heavy industry remains the region's mainstay. We expect the government's plan to emphasize on the revival of the energy and non-ferrous sectors," said Wu Feng, analyst, TX Investment Consulting Co Ltd.

The northeastern region emerged as the mainstay of the heavy industry since the first five-year plan started in 1953, and produced the country's first barrel of oil and the first automobile.

However, its luster started fading after the rise of the eastern coast region thanks to the country's reform and opening-up policies since 1978.

But some analysts cautioned that the recent rallies could be short-lived given that most of the companies, which are State-owned in the region, are short of fundamental backups, have poor in-house management and complicated structures.

Tianlun Real Estate Development Co Ltd based in Heilong-jiang province, which rose more than 20 percent in the past three days, posted 5.35 million yuan in net profit in 2008, a decline of 62.1 percent compared with a year ago.

"The region has too many firms spread across diverse industries and it is hard to find an investment focus," said Zhong Hua, analyst, Changjiang Securities.

"We have not seen any renewed investment in the concept stocks which stand to benefit from the recent government plans to boost Shenzhen and Fujian's Haixi economic zone. By the same token, we also do not see any investment logic from the plan," he said.

(China Daily June 4, 2009)