Investors dump alcohol and e-cigarettes stocks in China after state media criticism
Reuters
Published Aug 05, 2021 06:49AM ET
SHANGHAI (Reuters) - Investor jitters over which sectors Chinese regulators might target next spread to the spirits and e-cigarette industries on Thursday after state media ran reports about the dangers of their products, sending related companies' shares lower.
Shares in fertilizer companies were also hit after China's top market regulator announced late on Wednesday that it would launch an investigation into fertilizer companies suspected of driving up prices.
The sell-off demonstrated how investors remain on edge and on the hunt for clues about which companies might be vulnerable to state intervention, after the property, education and technology sectors were hit by Beijing regulators in recent months with unprecedentedly sweeping rules.
Shares in RLX Technology Inc, China's leading e-cigarette brand, and smaller peers Smoore International Holdings Ltd and China Boton Group Co Ltd tumbled after state news agency Xinhua published a report saying that minors were gaining easy access to e-cigarettes.
Similar market sentiment took hold of liquor related stocks, after the Ministry of Science and Technology posted an article citing a study that linked alcohol consumption to cancer.
China's CSI Liquor Index closed down 1.47% on Thursday, with shares in Kweichou Moutai Co Ltd and Wuliangye Yibin Co Ltd down 1.5% and 3.1% respectively.
State media attention on the dangers of alcohol and e-cigarettes follows various op-eds in Chinese publications which pilloried the gaming industry for its adverse impact on Chinese youth, triggering a sell-off in the sector.
An op-ed published Tuesday in a state-backed media outlet calling video games "spiritual opium" caused widespread speculation that the gaming sector would be the next target for Chinese regulators, and caused shares in Tencent Holdings (OTC:TCEHY) Ltd, China's largest gaming company, to fall over 10% on Tuesday. https://www.reuters.com/technology/tencent-falls-after-china-media-calls-online-gaming-spiritual-opium-2021-08-03
The article was subsequently edited and re-published, but media outlets have continued to publish pieces critical of the sector. On Thursday, China's Securities Times ran a piece calling for an end to tax breaks for gaming companies
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Written By: Reuters
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