China Liquor Stocks Climb After Lagging in Rally: Shanghai Mover

Kweichow Moutai Co. and Wuliangye Yibin Co. led a rally for consumer-staples producers on speculation their shares will catch up with the broader stock market’s gains since the end of last year.

Kweichow Moutai, China’s biggest producer of baijiu liquor by market value, climbed 3.1 percent to 185.59 yuan at the close in Shanghai, the biggest gain in two weeks. Wuliangye, the second largest, added 2.6 percent to 25.77 yuan. Luzhou Laojiao Co. advanced 4.9 percent to 33.18 yuan while Sichuan Swellfun Co., the Chinese liquor maker that’s a partner of Diageo Plc, surged 7.3 percent to 18.73 yuan.

A measure tracking consumer-staples stocks in the CSI 300 Index jumped 1.7 percent, the most among 10 industry groups. The index climbed 12 percent through yesterday since a three-year low in Dec. 3, compared with a 24 percent gain for the CSI 300.

“Liquor makers are seeing a technical rebound after lagging behind in the recent market rally,” Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai, said by phone today. “The fundamentals of the liquor industry still remain bearish with prices of high-end liquor falling recently.”

Consumer staples were the second-worst performing industry group last year in the CSI 300 with a 4.7 percent loss. The gauge traded at 15.5 times reported profit on Dec. 3., a record low according to data compiled by Bloomberg. The measure is now valued at 17.6 times profit.

Shares of liquor makers have underperformed on concern demand will slow as the government cracks down on corruption. High-ranking military officials are banned from extravagant banquets and staying in civilian or military hotels with luxury perks, the official Xinhua News Agency reported on Dec. 22.