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China’s soccer league is plagued by corruption, match-fixing and betting fraud. Despite the country’s huge populations, its national men’s team is ranked lower than Haiti and Mali in FIFA’s latest scorecard.
Still, shares in Chinese soccer related companies have more than doubled over the past year.
Since President Xi Jinxin first outlined a 50-point road map in March 2014 to make China a soccer superpower, the country’s nine listed firms with ties to the league have surged an average 158 percent.
“To invest in China, you need to follow policies,” Tao Ye, a sports-industry analyst from Beijing, told the news bureau. “Soccer reform is getting a big push from the top and that’s why relevant stocks have gained so much.”
The president has vowed to root out sleaze and bribery in the sport, and pledged to establish 50,000 soccer schools by 2025. Players shall also be better compensated.
Related companies have gained from the push. Ledman Optoelectronic, which has the right to use the super league logo, has jumped 336 percent over the past 12 months, Bloomberg said. Also firms like Leshi Internet, Jiangsu Sainty Corp and Shanghai International Port – all linked to soccer clubs – have surged.
However, some analysts warn that soccer related stocks might be overvalued. Yu Jun, a strategist at Bosera Asset Management in Shenzhen, told Bloomberg it’s too early to judge if the reforms will be successful.
While shares in China have doubled in value over the past year, economic fundamentals are painting a distinctively gloomy picture. Its GDP outlook hasn’t looked this bad in 25 years.
“The rally in Chinese stocks has encouraged imprudent speculation, similar to that in the Chinese real estate markets, and may eventually collapse,” Ankur Patel, chief investment officer at R-Squared Macro, an investment firm based in the U.S., recently told me.
Rooting out corruption is also easier said than done. Anti-corruption expert Chris Eaton , head of the International Centre for Sports Security, ICSS, an organisation that tries to promote integrity in sport, recently said betting fraud is part of the reason why China has achieved so little in the sport despite its huge populations.
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