Asian Dairy Companies Surge as China Dumps One-Child Policy

By Steve Wynne-Jones
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Asian Dairy Companies Surge as China Dumps One-Child Policy

Asian dairy companies surged on expectations the end of China’s one-child policy will boost demand for products including infant formula.

Yashili International Holdings jumped as much as 13 per cent in Hong Kong trading as China Mengniu Dairy Co. gained as much as 7.8 per cent. New Zealand’s Fonterra shareholders Fund, which tracks the earnings and dividends of the world’s biggest dairy exporter, closed 0.6 per cent higher. On Thursday, Danone rose 1.5 per cent and Glenview, Illinois-based Mead Johnson Nutrition climbed 3.8 per cent.

China, the biggest consumer of dried milk powders used in infant formula, plans to allow all couples to have two children, the official Xinhua News Agency said Thursday at the end of a four-day party gathering in Beijing. The country already accounts for about half the world’s whole milk powder consumption, though purchases are expected to drop about 40 per cent this year as economic growth slows and the nation works through large dairy stockpiles, U.S. Department of Agriculture data show.

“Scrapping the one-child policy is positive for companies producing baby products, including milk and diapers,” said Naohiro Niimura, partner at researcher Market Risk Advisory in Tokyo. “Consumption of infant formula could double if Chinese couples start having their second child, boosting earnings for milk producers in China as well as in other nations exporting products to the Chinese market.”

World milk prices have slumped this year in part because of a slowdown in Chinese imports. The collapse has spurred losses for farmers from Europe to New Zealand, sparking protests and leading the European Union to adopt a €500 million ($549 million) emergency aid package to help keep some producers in business.


Bloomberg News, edited by ESM


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