(Yicai  Global) May 14 -- Shares in Aoyang Health Industry rose by the maximum  10 percent daily limit today after affiliate Aoyang Technology teamed  with Jiangsu Textile Industry Design and Research Institute to develop  hemp fiber textile products. 

Aoyang Health  [SHE:002172] rose 10.06 percent to CNY5.25 (USD0.77) after a statement  confirming plans to jointly develop hemp for making underwear,  outerwear, shoes and bedding, as well as home, hygiene and medical  supplies.

Hemp has become an investment hotspot  in the Chinese stock market since the beginning of this year. Stocks of  many listed companies surged after they announced entry into the hemp  cultivation and processing sector. But China has not approved the  cultivation of hemp for medical use, nor the selling of drugs containing  active cannabinoids such as tetrahydrocannabinol.

JTIDRI  will develop hemp pulping tech, fiber production and modification in  accordance with the requirements of Jiangsu province-based Aoyang. It  will cover the initial CNY100,000 (USD145,55) annual research and  development costs over the two-year deal. 

Aoyang  will pay CNY1 million after completion of a small-scale hemp fiber test  and another CNY2 million after the close of the trial production. The  firm will also pay CNY5 million if mass production is achieved.

Aoyang also inked a deal with Zhaoguang Farm in northeastern Heilongjiang  province on May 13 to ensure the supply of raw materials. The latter  will plant up to 333,333 square meters of hemp this year and Aoyang will  purchase all of the output. 

Hemp fiber products  can be used for skin care as well as bacteria and mite prevention, and  the development of related products will spur Aoyang's growth, the  announcement said.

Editor: William Clegg