Moutai’s record-setting run may be start of new year rally in China’s luxury liquor sector
Rising demand from middle class and collectible investment trend for vintage spirit could drive growth of the high-end white liquor sector in 2017
Shares of Kweichow Moutai, one of the world’s largest liquor makers by market capitalisation and the bellwether of China’s luxury liquor industry, have been setting new records since the start of the year.
Analysts believe the demand for expensive Chinese grain liquor has begun to recover after three years of declines, boosted by factors such as restocking to replenish low inventories, rising consumption from the middle class, and the product’s appeal as a collectible investment amid inflationary expectations.
Kweichow Moutai, a state-owned producer of the top luxury brand of baijiu (literally white liquor), set a new intra-day price record at the end of last week, hitting 359.78 yuan during trading on the Shanghai stock exchange. It closed Friday at 350.76 yuan.
Two days earlier, it had surged 5.2 per cent to a record closing high of 351.91 yuan, pushing its market cap to 442 billion yuan, second only in the world to Britain’s Diageo, which owns the well-known spirit brands of Johnnie Walker and Smirnoff.
Kweichow Moutai is currently the highest priced stock in the mainland A-share market.
“The new year price rally may be triggered by anticipated demand growth in the upcoming Chinese Lunar New Year holidays,” said Wang Ying, an analyst for Hua Chuang Securities. “It’s a traditional peak season for liquor consumption in China, in particular high-end liquor.”