China stocks climb to a 22-month high as liquor juggernaut Moutai surges to record

Mainland China stocks rose for a fifth day, pushing the benchmark index to an almost 22-month high, as consumer companies jumped after liquor giant Kweichow Moutai reported accelerating profit growth.

The Shanghai Composite Index gained 0.5 per cent, or 15.55 points, to 3,412.45 at the midday break, set for the highest close since December 2015. The CSI 300 Index of big-cap companies rallied 0.8 per cent, while the ChiNext gauge of smaller firms, added 0.2 per cent. Hong Kong’s equity benchmark dropped slightly.

Kweichow Moutai, the nation’s most valuable liquor maker, said in its quarterly report that profits increased 60 per cent from a year earlier in the first three nine months, compared with the 28 per cent growth rate in the first half. Its accelerated earnings growth further bolstered local traders’ confidence in continuing to bet on large leading companies across industries that are reasonably priced and offer solid earnings outlook.

The preference for big-cap shares has driven up the CSI 300 Index by 21 per cent this year, while keeping the ChiNext measure flat with a 2.3 per cent drop.

“Moutai’s results are a surprise and beat the market expectations by a large margin,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “That will further stoke the interest in blue-chip stocks and expand their valuations. The broader market will probably continue to rise with the help of big-caps.”

Kweichow Moutai surged 6.1 per cent to a record high of 600 yuan, heading for the biggest gain since August 2015. Trading volumes on the stock were more than five times its 180-day average, according to data compiled by Bloomberg.