OpinionNew Shenzhen stock link expected to raise the spirits of listed Chinese liquor firms
Shares in premium baijiu producers tipped to be attractive to foreign buyers as they are considered ‘China-unique’ companies
Offshore investors will soon have the ability to buy into three Shenzhen-listed Chinese liquor makers, Wuliangye Yibin, Luzhou Laojiao, and Jiangsu Yanghe Brewery, through the Shenzhen-Hong Kong Stock Connect, just as each posted strong third-quarter results.
Experts suggest premium producers of Chinese liquor, most often referred to as “baijiu”, could prove especially attractive to foreign buyers using the new link as they are considered “China-unique” companies with robust business growth, thanks mainly to increased expenditure on entertainment by mainland Chinese.
Shanghai-listed liquor maker Kweichow Moutai, the country’s biggest distiller by sales, said last week that its net profit for the third quarter climbed 5.9 per cent year on year to 3.7 billion yuan, with revenue up around 4.6 per cent to 7.9 billion yuan, as the whole industry continues to recover from government’s crackdown on luxury spending which hurt the industry in recent years, thanks to rising household consumption.
Moutai competes head-on with smaller local rival Wuliangye Yibin.
Shares in Shanghai-listed Kweichow Moutai have jumped 48.2 per cent so far this year, and are up 130 per cent since the Shanghai-Hong Kong Stock Connect was launched in November, 2014. Wuliangye has seen its stocks rise 98 per cent since the Shanghai linkup.