China's hottest stocks these days have one thing in common: names that sound like sheep

Tanner Brown

Shares of fish processors, lighting manufacturers and appliance makers have soared ahead of the Year of the Sheep. Investor appetite has had little to do with the status of their businesses.

Shopping in advance of the last Year of the Sheep - which began on Feb. 19, 2015 - at a market in Lin'an, Zhejiang Province.

On Nov. 3, shares of Septwolves, a Chinese menswear company, jumped 10% - the maximum allowed in a single day - for the second straight session. Business wasn't suddenly booming. Traders had simply discovered a new reason to buy the stock (CN:002029): Wolves eat sheep.

And, with the Year of the Sheep approaching, sheep were suddenly a big deal in China's stock market.

The joke was part of a speculative frenzy that sent shares of fish processors, lighting manufacturers and kitchen-appliance makers soaring, largely because of their names.

Here's the linguistic trick. The Mandarin word for sheep is yang. Other Chinese characters are pronounced exactly the same way but mean entirely different things. For stock traders, that was close enough.

Chinese traders have a history of betting on companies whose names resemble the animal representing the coming lunar year. The Year of the Sheep begins on Feb. 6.

Take Ocean's King (CN:002724), an industrial-lighting manufacturer. Its Chinese name, Haiyangwang, contains the syllable yang, though the character means ocean. Its shares shot up 111% in October. Seafood processor Baiyang (CN:002696), whose name uses the same character, ranked among the month's 10 best performers. Appliance maker Joyoung (CN:002242), called Jiuyang in Chinese, climbed 77%. Its yang means sun.

All three posted those gains in a month when the benchmark Shanghai Composite Index CN:SHCOMP lost 6.3%.

This sort of thing has happened before. Chinese traders have a history of betting on companies whose names resemble the animal representing the coming lunar year. The Year of the Sheep - or, alternatively, of the goat, or ram - begins on Feb. 6.

Wind, a financial-data provider, identified 70 mainland-listed stocks with names containing one of three identically pronounced characters meaning sheep, ocean or sun. They include steelmakers, solar companies, circuit-board manufacturers and seafood processors. None has any obvious reason to expect better earnings because of the lunar calendar.

That hasn't discouraged investors. On Nov. 3, 52 stocks hit their daily upward limits, and 11 of those had a yang sound in their names, according to National Business Daily.

Then traders got inventive. Joeone (CN:601566), another menswear maker, briefly hit its limit that day. Its Chinese name contains the character for herding, prompting online investors to label it a sheepdog play. Retailer Liqun Commercial (CN:601366) hit its limit because qun, one character in its name, means "flock" and contains the character for sheep.

Several of the favorites weren't even making money. Baiyang, which processes tilapia and produces fish feed, hit its upward limit 10 times in 18 sessions, despite losing 131 million yuan ($19.5 million) in the first nine months of 2026.

Another seafood company, Oriental Ocean (CN:002086), called Dongfang Haiyang in Chinese, reached its upward limit six times in 10 sessions. It has lost money every year since 2018, excluding one-time items.

Not every gain came from wordplay. Baiyang also benefited from soaring fishmeal prices, while traders linked Joyoung to robotics.

The companies themselves began sounding alarms. By Nov. 4, at least 10 caught up in the frenzy had issued investment warnings. Some pointed out that nothing material had changed in their businesses.

Tian Lihui, a finance professor at Nankai University, said that traders, when the market lacks a clear investment theme, gravitate toward something simple. A company's name is about as simple as it gets. Social media and quantitative trading have only made the cycles move faster, he said.

Previous zodiac rallies offer a warning. Ahead of the 2024 Year of the Dragon, auto-parts supplier Shenglong (CN:603178), or Holy Dragon, hit its upward limit 14 sessions running and eventually more than quintupled. By February 2024, it had lost nearly 60% from its peak.

The trouble with buying a stock because of its name is that the people who got in early have every reason to sell. So do insiders: Joyoung's controlling shareholder sold a 1.9% stake on Oct. 26 for roughly 300 million yuan ($45 million). Latecomers can wind up holding shares that have little to do with the companies' earnings. And once traders find something more exciting, the buying stops just as quickly as it started.

On Nov. 4, yang stocks including Baiyang, Sunshine Lighting, Sunshine Dairy (CN:001318) and Aoyang Health (CN:002172) plunged by the daily maximum. Septwolves swung from its upward limit to its downward limit in a single session, a reversal of roughly 20 percentage points.

The rest of the market was roaring. Shanghai's tech-heavy STAR Market index jumped a record 9.9% in a single day. The return of enthusiasm for technology stocks drew money away from the sheep trade.

Not that everyone had given up. On Nov. 12, Oriental Ocean hit its daily limit again despite a falling market, bringing its gains since Oct. 26 to more than 140%.

American investors will recognize the logic from the meme-stock era. Buy because you think somebody else will pay more, not because the company is making more money. In China, apparently, a pun can be enough.

Wang Jiyue, a veteran Chinese investment banker, told the Economic Observer newspaper that zodiac rallies are short-term speculation without much in the way of fundamentals. Ordinary investors would be wiser to watch from the sidelines, he said. They're the ones taking the risk.

The Year of the Sheep is still nearly three months away. That's a long time to hold a stock bought because it sounds like a sheep.

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-Tanner Brown

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11-15-26 1022ET