Russian President Putin's praise lifts stock prices of Chinese hard liquor maker Moutai
The shares price of China’s storied liquor maker, Moutai, has been on the rise this week after state television CCTV over the weekend reported Russian President Vladimir Putin’s complimentary remarks on the alcohol.
Kweichow Moutai Company’s stock price (Shanghai: 600519) had risen from 120.33 yuan when it closed last Friday to 128.1 yuan at noon on Tuesday, up more than six per cent. The rise this week has helped the Guizhou-based liquor maker to retake the top spot as the most expensive stock on China's domestic A-share markets.
To the surprise of television viewers and liquor lovers, CCTV broadcast a clip showing Putin twice mentioning the famous liquor brand during a group interview with foreign press in Sochi last Friday.
The Russian president jokingly told a CCTV reporter: “I’ve prepared moutai for you,” when journalists at the group interview were each served with a round of tea, the clip showed.
Later during the interview, the CCTV reporter cited Putin as complimenting the liquor. “He said moutai is excellent, and that Chinese liquors are very strong,” the journalist recalled Putin as saying during the programme aired on Sunday afternoon.
CCTV has yet to broadcast the full interview, but the Russian strong man’s interesting comments and unexpected fondness for the Chinese brand has made the clip one of the hottest items on Chinese video-sharing sites.
James Button, a senior manager of Shanghai-based consulting firm SmithStreetSolutions, said the Kweichow Moutai Company’s share hike was partly due its announcement on Saturday, which said its 2013 revenues had topped four billion yuan - up 13.8 per cent from a year earlier.
“But Putin’s remarks also came at a great time for moutai,” Button added. “Putin has such a good image among general public in China, so him as a spokesperson for moutai certainly has a positive impact on consumers.”
Putin’s comments also reflected that the company’s efforts to boost its liquor’s image in the overseas market had paid off, Button said, at a time when the Chinese government is eager to promote the nation’s soft power.
“So I don’t think it is pure coincidence that Putin mentions moutai at such a time,” he said.
With an alcohol content of more than 50 per cent, Moutai is perhaps the most famous liquor brand in China. Long consumed at feasts on official occasions with foreign heads of state, the award-winning liquor has been advertised and recognised as the national liquor of China. In mid-2012, its stock price reached a historical high of 266 yuan (HK$338).
While its special official status helped the liquor gain an edge over its competitors, resulting in a price surge over the past decade, its reputation has been marred by the rampant circulation of fake liquors in the market as well as its frequent appearance during busts of officials for bribery and other corrupt activities.
Moreover, a determined crackdown by the Communist Party on local officials’ extravagance lifestyles, often involving high consumption of liquors like moutai, has dealt a heavy blow to the once-thriving business.
On January 8, the company’s share price tumbled to 118 yuan, down 55 per cent since 18 months ago. Over 150 billion yuan worth of market value vanished.
Kweichow Moutai Company did not immediately comment on the issue on Tuesday.
Video: Putin mentions Kweichow Moutai in an interview