China’s Third Child Policy Increases Shares in Toy and Diaper Manufacturers | World news
SHANGHAI (Reuters) – The stocks of Chinese toy makers, diaper makers and baby food companies rose on the second day of Tuesday as investors piled into stocks that benefited from Beijing’s new three-child policy.
China’s announcement on Monday that it would allow married couples to have up to three children – up from the previous limit of two – also prompted broker analysts to scrutinize stock recommendations, despite popular belief that policy change will not have a sudden impact the falling birth rate in the country.
The shares of the toy maker Goldlok Holdings (Guangdong) Co jumped to their daily limit of 10% on the second day, as did the shares of Jinfa Labi Maternity & Baby Articles Co.
Other baby-related stocks, including powdered milk maker Beingmate Co, baby products maker Shanghai Aiyingshi Co, and infant care device maker Ningbo David Medical Device Co also rose.
An index that tracks so-called “Third Baby Concept” stocks, re-compiled by Hitink RoyalFlush Information Network Co, rose about 2.5% on Tuesday, while China’s benchmark stock index remained roughly unchanged.
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Hu Yunlong, a Beijing-based hedge fund manager, said the sharp gains in such stocks were the result of “short-term speculation” as he saw limited immediate impact on company fundamentals.
China has lifted the birth cap to avert risks to its economy from a rapidly aging population. However, analysts say that given the high cost of childcare, politics is unlikely to increase many couples’ willingness to have more children.
However, Xu Qi, investment advisor at Guosheng Securities, said Luolai Lifestyle Technology Co, which makes home textiles such as quilts and pillows, will benefit from the new policy. He also recommends Zhejiang Semir Garment Co, which makes children’s clothing.
Essence International suggested that investors should look out for China Feihe Ltd, a Hong Kong-listed manufacturer of infant milk products.
Meanwhile, Chinese public companies were asking questions from investors asking how their businesses will be affected by the new directive.
Thinker Agricultural Machinery Co Ltd, a manufacturer of rice harvesting equipment, was asked if the company was a “third-child concept” share.
“Thank you for your humorous question,” replied the company on an online investor relations platform.
The indirect link is that “an increase in population will increase the consumption of grain … and the demand for harvesters.
“But the premise is … people are ready to have a third child.”
(Reporting by Samuel Shen, Luoyan Liu and Andrew Galbraith; Editing by Jacqueline Wong)
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