Bumpy road for China stocks: baby boom one day, import cuts the next

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It’s been an up-and-down week for investors in ASX-listed China exporters.

Things were looking up on Monday when news broke that China was planning to scrap all limits on the number of children a family can have.

Cue the celebrations for ASX-listed infant formula stocks.

China’s one-child policy was introduced in 1979 and later relaxed to two children in 2016. But the policy has contributed to an ageing population and a shortage of workers.

News agency Bloomberg reported that China’s cabinet now plans to end the policy.

Then on Tuesday sentiment towards China-focused stocks made a u-turn as Chinese State media suggested Beijing could cut Australian imports by up to $US10 billion if Canberra didn’t change its attitude towards China.

“Lowering Aussie exports by $6.45 billion would send cold chills up and down the spine of Australia,” said the government-owned tabloid Global Times — which is known for belligerent statements. “Of course, it would be an even greater shock if the import reductions totalled $10 billion.”

Comments from politicians about rising Chinese Communist Party influence in Australia are a key source of Beijing’s disillusionment, which is now spilling out into the open.

A spokesman for China’s foreign minister Wang Yi said Australia “must break away from its traditional thinking, take off its tinted glasses to look at China’s development from a more positive angle”.

Any move to limit Australian imports would impact a wide variety of ASX stocks in segments from coking coal to battery metals to infant formula.

Cue the hand-wringing and angst among China-focused ASX-listed exporters.

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ASX investors weren’t impressed, selling down China-focused stocks.

Below is a table of about 45 (non-resources) China-focused ASX companies.

Measured over 12 months, about two-thirds of the stocks show gains — some very significant.

Ten of the best performing 13 stocks in the table are dairy or infant formula exporters such as Jatenergy, Bubs, Bioxyne, Wattle Health, Bellamy’s and A2 Milk. These are showing three-digit gains from 100 per cent all the way to 900 per cent.

Over the past two days, it’s a different story. Wattle, Bioxyne, A2 Milk and Bellamy’s and others have lost ground — albeit nowhere near as much as they have gained over the past year.

Here’s a list of ASX-listed, non-resources stocks with exposure to China.

Most are exporters, though we’ve included a few that are based in China and would presumably be unaffected by any move to limit imports.

With additional reporting by Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.

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