|Bid||1,960.00 x 0|
|Ask||1,960.75 x 0|
|Day's Range||1,960.00 - 2,085.00|
|52 Week Range||960.10 - 2,627.88|
|Beta (5Y Monthly)||0.83|
|PE Ratio (TTM)||55.23|
|Earnings Date||Mar 31, 2021|
|Forward Dividend & Yield||17.02 (0.83%)|
|Ex-Dividend Date||Jun 24, 2020|
|1y Target Est||748.77|
(Bloomberg) -- The most popular stock trade in China is unraveling, tarnishing the reputations of some of the country’s most successful money managers and undermining the outlook for the world’s second-largest equity market.Until three weeks ago, buying the nation’s beloved liquor maker Kweichow Moutai Co. was a surefire way for the $3 trillion mutual fund industry to mint money and attract bumper inflows. The stock soared 30% year-to-date through its Feb. 10 record, after gaining almost 70% in 2020 -- and doubling in the year before that.Many funds, flush with a record amount of cash, didn’t have a choice if they wanted to keep their clients and attract new investors. Buying Moutai was the simplest and most effective way to top rankings -- until it wasn’t. The stock began tumbling after the Lunar New Year break, and kept falling. It’s now down 22% since its peak, including a drop of as much as 6% Thursday, and has lost more than $111 billion in value.One of the most high-profile casualties is E Fund Management Co.’s Zhang Kun, the first in China to oversee 100 billion yuan ($15 billion). Zhang’s E Fund Blue Chip Selected Mixed Fund is down 12% in 10 trading days after returning 95% last year largely due to a big bet on baijiu, the Chinese white spirit. The fund had 9.6% of its assets invested in Moutai as of December. Another fund run by Zhang has lost 23%. Zhang didn’t immediately reply to a request for comment.The fund manager has received “verbal abuse” in recent weeks by investors who were previously fans, according to a report Wednesday in China’s state tabloid Global Times. He was known as “Prince Charming” or “Brother Kun” among his investors, who now refer to him on social media as “Kun Gou” or “Kun the dog” -- an offensive term in Chinese.Other copycat money managers will be feeling the pain: recent data showed two-thirds of mutual fund assets were invested in only 100 stocks, while the top 400 stocks lured 93% of total funds. Although China’s onshore market contains more than 4,000 stocks, Moutai is by far the largest with a market value of about $390 billion.Moutai accounts for 27% of the loss in the FTSE China A50 Index of the nation’s largest companies since Feb. 10. When added together with fellow spirit makers Wuliangye Yibin Co. and Luzhou Laojiao Co., the three comprise more than half of the gauge’s decline.Concern had been growing about the stretched valuations of Moutai and its peers, especially as gains accelerated. A gauge tracking consumer staples, including liquor makers, traded at a record 36 times projected 12-month earnings in February.Read how China is warning against ‘entertaining’ investors with fund pitchesTo be sure, the company’s shares have faced plenty of risks in the past. The stock tumbled about 8% in a single day in July after the People’s Daily criticized the high price of the company’s liquor. In 2017, Xinhua News Agency said the stock was rising too fast, triggering a selloff. Back in 2013, the stock plunged when Xi Jinping came to power and clamped down on lavish spending by party cadres.But this time around, authorities have grown increasingly concerned about risks to the financial system posed by excess liquidity. On Tuesday, China’s top banking regulator jolted markets with a warning about the need to reduce leverage amid the rising risk of bubbles globally and in the local property sector. With Moutai being the best-known proxy for liquidity-fueled bets and momentum, fund managers will likely need to find a new strategy to protect their returns.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Kweichow Moutai Co. investors are selling their shares at the fastest pace in more than two years, a warning for a market that owes much of its rally to a handful of large caps.The biggest stock listed in mainland China has lost $80 billion since onshore markets reopened after the Lunar New Year holiday. Wednesday’s 5.1% drop put Moutai’s five-day decline at 16%, the biggest for such a period since October 2018. The company had rallied 30% this year through its Feb. 10 record close.Momentum trades are cracking after the CSI 300 Index briefly surpassed its 2007 closing peak. Chinese traders were griping about a lack of market breadth before the holiday and extreme valuations for some of the most-loved stocks. Less than 10 companies accounted for half of the returns on the benchmark -- including Moutai -- with foreign investors and domestic mutual funds compounding the problem by buying the most liquid megacaps.“This is the beginning of the end for baijiu’s outrageous valuations and the mark of a massive shift to value stocks,” said Dong Baozhen, fund manager at Beijing Lingtongshengtai Asset Management. The big baijiu gains of the past year “have become a prisoner’s dilemma - whoever sells first wins.”Triggers for the reversal include signals on tighter monetary policy from the central bank. The People’s Bank of China is withdrawing liquidity from the financial system, while local media ran a front-page editorial this week saying China’s economic recovery is creating the conditions for the central bank to “normalize” monetary policy.The CSI 300 ended 2.6% lower, with the consumer staples sector that includes baijiu down 4.5%. Health care, which had also been among the market’s best performers until the holiday, dropped 4.4% Wednesday to cap its biggest three-day drop since December 2018.Other makers of baijiu -- a popular liquor in China -- are among the worst performers on the CSI 300 in the past five days, with Shanxi Xinghuacun Fen Wine Factory Co. down 22% and Luzhou Laojiao Co. losing 21%. The Securities Times newspaper on Tuesday listed three major concerns around the baijiu trade, including record-high valuations, overly heavy positioning by institutional investors and the demise in popularity of the spirit among the younger generation.A high-profile fund managed by a star manager Zhang Kun, known for his outperformance in recent months and heavy allocation in the baijiu sector, suspended new orders starting Wednesday. The industry accounted for about 40% of the fund’s holdings, according to a fourth-quarter filing, with top positions including Moutai.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
As luxury spending rebounds in China, consumers with money to burn have a new habit beyond fancy bags and watches: a taste for collector editions of fiery domestic liquor Moutai, not to drink but to hold onto as a rapidly appreciating investment. Amid China's recovery from the coronavirus pandemic, Moutai buyers like Beijing tech worker Yang Nan have seen re-sale prices for vintage and limited editions of the 'baijiu' spirit made by Kweichow Moutai rocket as demand booms.