The mainland’s biggest domestic airlines are among stocks that will extend gains as Shanghai opens a free-trade zone, according to US investment bank Goldman Sachs.

China Southern Airlines and China Eastern Airlines have share price “upside”, along with Lao Feng Xiang, a Shanghai-based jewellery company, and Hong Kong-traded Shanghai Industrial Holdings, Goldman Sachs analysts led by Chenjie Liu wrote in a note yesterday.

Banks, shippers and port operators have led gains since August 22, when the Ministry of Commerce said the city’s free-trade zone proposal had been approved in July.

Shanghai International Port Group has since climbed 170 per cent, the most among the 995 companies on the Shanghai index. China Eastern, which is based in Shanghai, has climbed 35 per cent. The Shanghai Composite Index has risen 15 per cent since reaching this year’s low on June 27.

“Be selective in choosing potential beneficiaries,” the Goldman Sachs analysts wrote. “Given actual earnings boost may show up only in the medium term, we prefer beneficiaries that have upsides based on existing businesses, with the Shanghai free-trade zone potentially providing room for additional upside.”

The free-trade zone is part of the central government’s plan to develop Shanghai into a global financial and shipping centre by 2020. A draft plan for the area seen last week expanded opportunities for foreign companies in industries from banking to health insurance. Details of the new zone’s policies and rules have yet to be announced.

The Shanghai plan has overshadowed a similar proposal for Hengqin island in Zhuhai.