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Fake Meat Hype Has China Ham Stock Surging, Regulator Concerned

Bloomberg News

(Bloomberg) -- One Chinese company is under the eye of regulators for possibly taking advantage of the market’s obsession with artificial meat.

Shares of Jinzi Ham Co. briefly fell the 10% daily limit Wednesday, extending this week’s pullback, as the Shenzhen Exchange questioned the firm’s motives in talking about fake meat recently.

The comments, including an announcement about starting sales of artificial meat products on major online platform Taobao, preceded plans by executives to sell about 5% of shares outstanding in Jinzi. Shares rose the 10% daily limit in five of six trading days earlier this month, climbing a cumulative 47% to reach mid-2018 levels.

But they’re down 14% since.

In the U.S., Beyond Meat Inc. shares have more than quadrupled since May’s initial public offering despite sinking 55% from July’s high. Meanwhile, African swine fever has wiped out millions of pigs in China, driving pork prices through the roof and prompting some consumers to seek alternatives.

In China, some companies that say they aren’t in the artificial meat business and don’t plan to enter it have nonetheless seen shares surge. Vermicelli maker YanTai Shuangta Food Co. has tripled in 2019 while Hefei Fengle Seed Co. has jumped 144%. Jinzi recently disclosed that revenue so far this year from artificial meat makes up 0.03% of the firm’s total.

“None of the artificial meat trades make any sense because there is no marketable product,” said Wu Xianfeng, fund manager at Shenzhen Lonteng Assets Management Co.

He noted that in China, fake meat currently is considered as tofu products. “Investors are desperate to look for the next big thing to benefit from rising pork prices after beef and chicken, and fake meat best meets the requirements.”

To contact Bloomberg News staff for this story: April Ma in Beijing at ama112@bloomberg.net

To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Kevin Kingsbury, David Watkins

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