Caixin
Sep 27, 2021 02:51 PM
FINANCE

China Stocks Rise as Liquor Firms Surge to Offset Power-Cut Woes

A worker collects bottles of Moutai liquor from a cart at the Kweichow Moutai factory in the town of Maotai in Southwest China’s Guizhou province in December 2017. Photo: Bloomberg
A worker collects bottles of Moutai liquor from a cart at the Kweichow Moutai factory in the town of Maotai in Southwest China’s Guizhou province in December 2017. Photo: Bloomberg

(Bloomberg) — Liquor company stocks drove advances in the Chinese mainland market, even as materials shares fall due to concerns over power curbs that have hurt large swathes of manufacturing in the country.

Liquor giant Kweichow Moutai Co. Ltd. climbed as much as 10% while Luzhou Laojiao Co. Ltd. also soared by the daily limit. The CSI 300 Consumer Staple Index jumped as much as 8.4%, set for the best day since 2008.

Stocks Chart

Pledges by Moutai’s new chairman Ding Xiongjun at a Friday shareholders’ meeting on long-term reforms, such as changes in distribution channels and pricing, should boost the prospects of rising selling prices as well as volumes, Sinolink Securities Co. Ltd. analysts including Liu Chenqian wrote in a note. They expected an “acceleration period in earnings” next year and in 2023.

Material stocks, however, 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. Ltd. and China Northern Rare Earth Group High-Tech Co. Ltd. were among the biggest drags on the index, each tumbling at least 9.8%.

The CSI 300 Index rose as much as 1.5%, with more than half of the 10 top performers being alcohol producers.

The rebound in liquor stocks followed months of sell-offs in the shares 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 around 30% from a February high despite Monday’s spike, the worst among all sectors.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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