Chinese Dairy Shares Surge Following Government Support for Local Milk Production

China 30.09.2024

Source: DairyNews.today

Shares in major Chinese dairy companies soared after the government introduced measures to boost local milk production and encourage consumption. Mengniu Dairy Co. saw a dramatic 25% rise in Hong Kong, marking its largest intraday gain since 2008, while Inner Mongolia Yili Industrial Group Co. climbed as much as 8.9% in Shanghai.

Chinese Dairy Shares Surge Following Government Support for Local Milk Production

The policy support, which includes loans and consumer vouchers, aims to address the sector's ongoing challenge with excess production capacity. Additionally, China's recent anti-subsidy investigation on European Union imports is expected to limit overseas competition, providing further relief for local dairy firms.

Analysts suggest these measures could lead to upward revisions in 2025 financial forecasts for companies like Mengniu and Yili. Bloomberg Intelligence’s Ada Li noted that the new incentives could drive improvements in sales and profit margins, especially as China's per capita dairy consumption remains well below the global average.

Optimism is further bolstered by consumption-focused policies introduced ahead of the holiday season, signaling a potential recovery for the domestic dairy market.