SHANGHAI (Reuters) – Shares of Chinese toy makers, diaper producers and infant food companies climbed for the second day on Tuesday, as investors piled on stocks believed to benefit from the new policy of the three children of Beijing.
China’s announcement Monday to allow married couples to have up to three children – up from the previous limit of two – also prompted brokerage analysts to scramble to recommend stocks, despite a widely perceived perception. shared that the policy change will not have a sudden impact on the country’s falling birth rate.
Shares of toy maker Goldlok Holdings (Guangdong) Co hit their daily limit of 10% for the second day, as did shares of Jinfa Labi Maternity & Baby Articles Co.
Other baby-related stocks including milk powder maker Beingmate Co, baby products maker Shanghai Aiyingshi Co and toddler care equipment maker Ningbo David Medical Device Co also soared. .
An index that tracks so-called ‘third baby concept’ stocks, newly compiled by Hithink RoyalFlush Information Network Co, rose about 2.5% on Tuesday, while China’s benchmark stock index was roughly stable.
Hu Yunlong, a Beijing-based hedge fund manager, said the large gains in those stocks were the result of “short-term speculation,” as he sees limited immediate impact on company fundamentals.
China has raised the birth limit to avoid risks to its economy due to the rapid aging of the population. But analysts say the policy alone shouldn’t boost the desire of many couples to have more children, given the high costs of childcare.
Still, Xu Qi, investment advisor at Guosheng Securities, said Luolai Lifestyle Technology Co, which makes home textile products such as quilts and pillows, should benefit from the new policy. He also recommends Zhejiang Semir Garment Co, which manufactures children’s clothing.
Essence International suggested that investors pay attention to China Feihe Ltd, a Hong Kong-listed infant formula manufacturer.
Meanwhile, Chinese listed companies have responded to questions from investors concerned about how their companies will be affected by the new policy.
Thinker Agricultural Machinery Co Ltd, a manufacturer of rice harvesters, was asked if the company was a “third child concept” stock.
“Thanks for your humorous question,” the company replied on an online investor relations platform.
The indirect relationship is that “an increase in population will increase the consumption of grain … and the demand for collectors.”
“But the prerequisite is that … people are ready to have a third child.”
(Reporting by Samuel Shen, Luoyan Liu and Andrew Galbraith; Editing by Jacqueline Wong)