(Bloomberg) — Shares of Chinese liquor makers drove advances in the mainland market after an executive at Kweichow Moutai Co. pledged long-term reforms that should boost business.
The liquor giant climbed as much as 10% while Luzhou Laojiao Co. 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.
Reforms including distribution channel changes and pricing pledged by Moutai’s new Chairman Ding Xiongjun during a Friday shareholders’ meeting should lift prospects of higher selling prices as well as volumes, Sinolink Securities Co. analysts including Liu Chenqian wrote in a note. They expected an “acceleration period in earnings” next year and in 2023.
READ: Moutai’s New Management Seen Lifting Growth Outlook: Street Wrap
Ding said Moutai will focus on its main business and push for reforms in corporate governance, asset management as well as marketing and pricing systems, according to a statement posted on the company’s official WeChat account.
The rebound in liquor stocks follows months of selloffs 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.
The CSI 300 Index rose as much as 1.5%, with more than half of the 10 top performers being alcohol producers.
Losers
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. and China Northern Rare Earth Group High-Tech Co. were among the biggest drags on the CSI 300 Index, each tumbling by the daily limit.
Cosco Shipping Holdings Co. also tumbled by the daily limit to be the biggest drag on the index, as the power crunch led to fears over a decline in shipping demand on reduced factory output.
READ: China Power Crunch Is Next Economic Shock Beyond Evergrande (1)
In Hong Kong, shares tied to cryptocurrencies also trended lower after China banned transactions and vowed to root out mining of digital assets. Huobi Technology Holdings, which started one of the world’s largest Bitcoin exchanges about seven years ago, sank as much as 33%, the most ever.
High-yield Chinese developers listed in the city also fell after Sunac China Holdings Ltd. sought help from a local government in the eastern province of Zhejiang, the latest sign that the nation’s property slowdown and the crisis at China Evergrande Group are weighing on builders. Sunac shares slid as much as 6.4% while distressed Guangzhou R&F Properties Co. dropped 4.8%.
Developers traded in Shanghai declined with their Hong Kong-listed peers, with the Shanghai Stock Exchange Property Index down as much as 3.4%, the most in two months. The sector along with utilities shares led a retreat in the Shanghai Composite Index, which fell as much as 1.5%.
(Adds property developers’ drop in Shanghai and the Shanghai Composite’s decline in the last paragraph.)
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