(Bloomberg) -- Shares of Kweichow Moutai Co. were set for their biggest-ever fall in trading for the day before the Mid-Autumn festival as China’s sluggish economy dented demand for its liquor and other premium goods.
The stock fell as much as 2.8% on Friday, their lowest level since May 2020. Moutai’s flagship liquor, Feitian, saw prices slide earlier this year as the nation’s property slump and economic worries reduced the number of occasions when the high-end beverage may be consumed.
“Looking ahead, we see that the characteristics of ‘de-real estate dependence’ and ‘de-luxury’ in liquor consumption will continue to stand out,” Guotai Junan Securities analysts including Zi Meng wrote in a note. “The sales volume of the liquor industry in August and September has slightly rebounded month-on-month, but the total demand in most regions has still fallen year-on-year.”
Moutai’s shares have slipped almost 25% this year, setting them up for their worst annual performance since 2013, when government spending and dining took a hit by the sweeping anti-graft campaign. Even as Moutai aims for 15% operating revenue growth in 2024, analysts have been cutting target prices on the liquor maker.
Next week’s three-day festival and the upcoming Golden Week peak season are among the highest sales periods for the world’s second largest economy. Moutai, which lost its spot in June as China’s most valuable onshore equity, is often seen as a barometer of consumer sentiment.
--With assistance from Mengchen Lu.
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