Kweichow Moutai fell the most in nearly two years after the influential People’s Daily took aim at the high price of the liquor it makes, saying the alcohol was often used in corruption cases, reported Caixin.
Moutai, China’s biggest domestically listed company, tumbled 7.9% in its worst decline since October 2018, wiping out a record $25 billion of value. Moutai’s products are often involved in the country’s official corruption cases and used for bribery given their high prices, according to a commentary carried by a WeChat account owned by the People’s Daily.
The plunge reverberated across China’s almost $10 trillion stock market, with the SSE 50 Index of the nation’s largest companies sinking 4.6%, its worst decline since early February. Other liquor makers also plummeted, with Wuliangye Yibin Co., Jiangsu Yanghe Brewery Joint-Stock Co. and Luzhou Laojiao Co. all falling by the 10% daily limit.
“Both Moutai shares and its products are hot investment targets, and cracking down on them signals the regulators’ determination to remove froth from the A-share market,” said Zhang Gang, a strategist at Central China Securities Co. “Moutai is such a heavyweight, and if this bubble keeps building, the aftermath will be terrible if it bursts. Policymakers don’t want to repeat the history of 2015.”