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Moutai Rises to 1-Week High After Test Results: Shanghai Mover

Dec. 11 (Bloomberg) -- Kweichow Moutai Co. rose to the highest level in more than a week in Shanghai trading after safety tests conducted this year showed the company’s products met government standards for three chemicals.

The shares rose 1.8 percent to close at 202.31 yuan, the highest since Nov. 30. The benchmark Shanghai Composite Index slipped 0.4 percent.

Samples sent to the National Food Quality Supervision and Inspection Center and two laboratories in Guizhou province and Shanghai this year met government safety levels for three chemicals, including dibutyl phthalate, according to a stock-exchange statement yesterday. The stock of China’s second-biggest liquor maker, dropped 11 percent in the past three weeks after some products made by liquor maker JiuGuiJiu Co. were first reported to have contained excessive levels of the plasticizer.

“The plasticizer issue is a short-term concern and Moutai’s announcement could help the share price stabilize and recover,” Ping An Securities analysts including Wen Xian wrote in a report today. The brokerage has a “strong buy” recommendation on the stock.

Moutai’s shares were suspended yesterday before the announcement. The company said it has conducted a comprehensive screening and risk assessment of the materials used in the production of its liquor.

Jishou, Hunan-based JiuGuiJiu apologized after the official Xinhua News Agency reported on Nov. 21 that some of its products were found to have more than three times the permitted level of dibutyl phthalate, or DBP, a plasticizer used to flavor drinks and make plastic containers.

Ingestion of dibutyl phthalate can cause gastrointestinal irritation, nausea, vomiting and diarrhea, according to the website of the Scottish Environment Protection Agency.

To contact Bloomberg News staff for this story: Shiyin Chen in Singapore at schen37@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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