Shares in China soar as beverage companies skyrocket to offset power outages

(Bloomberg) — Shares of Chinese spirits have fueled progress in the mainland market, even as material inventories plummet amid concerns over power restrictions that have hurt large swaths of manufacturing in the country.

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Beverage giant Kweichow Moutai Co. climbed as much as 10%, while Luzhou Laojiao Co. also increased with the daily limit. The CSI 300 Consumer Staple Index rose a whopping 8.4%, its best day since 2008.

Commitments by Moutai’s new chairman Ding Xiongjun at a shareholders’ meeting on Friday about long-term reforms, such as changes in distribution channels and prices, should boost prospects for rising selling prices and volumes, analysts at Sinolink Securities Co., including Liu Chenqian, wrote in a note. They expected an “acceleration period in earnings” next year and into 2023.

However, material inventories were the biggest losers in the benchmark on Monday as many provinces in the country still 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 barriers on the index, each dropping at least 9.8%.

The CSI 300 Index rose a whopping 1.5%, with more than half of the top 10 performers being alcohol producers.

The rebound in spirits stocks followed months of stock sell-off due to high valuations as investors moved into other sectors, such as energy and utilities. Despite Monday’s peak, the worst of all sectors, the CSI 300 index’s consumer staple commodity was still down about 30% from its February high.

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