U.S. Markets closed

Moutai Adds $32 Billion to Market Value on Best Day in Six Years

·3 min read

(Bloomberg) -- Kweichow Moutai’s shares recorded their biggest jump since April 2015 after the Chinese liquor giant’s new chairman pledged long-term reforms, lifting optimism on its growth outlook.

Most Read from Bloomberg

The stock closed 9.5% higher, adding nearly $32 billion to its market value and contributing more than half of the point gains in the benchmark CSI 300 Index. Other liquor producers also rose, pushing a subgauge of the consumer staples sector up by 7.4%, its best day in more than six years.

Reforms including distribution channel changes and pricing pledged by Moutai’s new Chairman Ding Xiongjun during a Friday shareholders’ meeting should lift prospects of higher selling prices as well as volumes, Sinolink Securities Co. analysts including Liu Chenqian wrote in a note. They expected an “acceleration period in earnings” next year and in 2023.

READ: Moutai’s New Management Seen Lifting Growth Outlook: Street Wrap

Ding said Moutai will focus on its main business and push for reforms in corporate governance, asset management as well as marketing and pricing systems, according to a statement posted on the company’s official WeChat account.

The rebound in liquor stocks follows months of selloffs due to high valuations as investors rotated into other sectors such as energy and utilities. The consumer staple subgauge of the CSI 300 index was still down 30% from a February high despite Monday’s spike, the worst among all sectors.

The CSI 300 Index finished Monday 0.6% higher, with more than half of the 10 top performers being alcohol producers.

Losers

Material stocks were the leading losers in the benchmark on Monday as many provinces in the country continue to struggle to supply electricity to factories and even households. Inner Mongolia BaoTou Steel Union Co. and China Northern Rare Earth Group High-Tech Co. each tumbled by the daily limit of 10%.

Cosco Shipping Holdings Co. also slumped by the daily limit to be one of the biggest drags on the index, as the power crunch led to fears over a decline in shipping demand on reduced factory output.

READ: China Power Crunch Is Next Economic Shock Beyond Evergrande (1)

In Hong Kong, shares tied to cryptocurrencies also trended lower after China banned transactions and vowed to root out mining of digital assets. Huobi Technology Holdings, which started one of the world’s largest Bitcoin exchanges about seven years ago, sank as much as 33%, the most ever.

The Hang Seng Tech Index shed as much as 1.3% as concern on Beijing’s regulatory crackdown lingered. A senior Chinese cyberspace official said Monday the authorities will take further steps to rein in Internet companies, citing the shared economy, online health care and smart delivery as areas of concern.

High-yield Chinese developers listed in the city also fell after Sunac China Holdings Ltd. sought help from a local government in the eastern province of Zhejiang, the latest sign that the nation’s property slowdown and the crisis at China Evergrande Group are weighing on builders. Sunac shares slid as much as 9.8% while distressed Guangzhou R&F Properties Co. dropped 4.8%.

Developers traded in Shanghai declined with their Hong Kong-listed peers, with the Shanghai Stock Exchange Property Index down 3.2%, the most in two months. The sector along with utilities shares led a retreat in the Shanghai Composite Index, which fell 0.8%.

(Updates prices throughout, adds Moutai market value in the second paragraph and Hang Seng Tech Index loss in the 10th paragraph.)

Most Read from Bloomberg Businessweek

©2021 Bloomberg L.P.