China mints 4 new billionaires on Tuesday, to add to 50 so far this year on record market rally

China's wealth machine shows no signs of stopping. -- PHOTO: REUTERS
China's wealth machine shows no signs of stopping. -- PHOTO: REUTERS

HONG KONG (Bloomberg) - China's wealth machine shows no signs of stopping.

Four new billionaires emerged on Tuesday after the biggest three-day gain in Chinese stocks since January pushed their stocks by the exchange-imposed limit to new highs.

Sun Jinguo, founder of Zhejiang Jingu Co., which makes wheels for commercial vehicles, and Liu Nianxin, chairman of Shenzhen Hongtao Decoration Co., both have a net worth of US$1.1 billion, according to the Bloomberg Billionaires Index. Wu Qianghua, chairman of Beijing eGOVA Co., a geographic information provider for the government, and Xie Zilong, chairman of Laobaixing Pharmacy Chain JSC, also have fortunes exceeding US$1 billion.

China has minted more than 50 billionaires so far this year as markets surged.

The benchmark Shanghai Composite Index posted a 7 per cent gain over three days, the biggest since Jan. 22. The Shenzhen index, which tracks shares on the smaller of the nation's two stock exchanges, closed at a record Tuesday after a three-day advance as the central bank cut interest rates for the third time in six months over the weekend.

"People are expecting more positive policies coming from mainland China," said Ronald Wan, chief executive of investment bank Partners Capital International Ltd. in Hong Kong. "The government will do more to inject liquidity to the real economy, and to try to stabilize the growth rate, and make the economy to perform better."

The four companies controlled by the billionaires jumped by the 10 per cent limit at the close in Shanghai and Shenzhen Tuesday.

The rally is poised to produce more billionaires as companies prepare to sell shares to the public.

Ni Zugen, who built a home-appliance manufacturer in China, is set to become a billionaire when KingClean Electric Co. begins trading on the Shanghai exchange on Wednesday.

Ni's Suzhou-based company is selling 41 million shares in an initial public offering, according to its prospectus. The 58-year-old chairman has 330.2 million shares held with his wife and son, giving him an 82 per cent stake after the share sale and a US$1 billion fortune, according to the Bloomberg index.

"People may see more and more IPOs," Wan said, predicting the pace of IPO approvals to pick up, to "meet the surging demand for the China stocks."