China Baby Stocks Climb as Government Mulls Lifting Birth Limit

(Bloomberg) -- Chinese formula and maternity-care stocks advanced after the country was said to be close to ending limits on the number of children a family can have, though the gains could be short-lived as a baby boom seems unlikely.

Maternity goods firm Shanghai Aiyingshi Co. surged by the 10 percent daily limit at the close, and Beingmate Baby & Child Food Co. climbed 1.4 percent in Shenzhen on a day of muted moves in China’s stock markets. Guangdong Qunxing Toys Joint-Stock Co. added 2.9 percent, and incubator maker Ningbo David Medical Device Co. also rose. Even piano makers enjoyed a boost, with Hailun Piano Co. and Guangzhou Pearl River Piano Group Co. advancing.

"The removal of birth limits won’t necessarily bring about a baby boom, so it’s likely a speculative trade that won’t last long," said Zhang Gang, Shanghai-based strategist with Central China Securities Co. "Big funds wouldn’t want to engage in such short-term trades, and the sector is just not big enough to handle the inflows."

China Baby Stocks Climb as Government Mulls Lifting Birth Limit

China’s cabinet is looking at what might happen if the country ended its roughly four-decade-old policy, said people who asked not to be named while discussing government deliberations. The country is facing the prospects of a rapidly aging population and has dealt with foreign criticism of its family-planning policies.

Read More: Why More Children May Be Bad for Economic Growth

Baby-related stocks in Japan also rose, with Pigeon Corp., Unicharm Corp. and Nippon Shokubai Co. adding at least 2 percent. Chinese tourists are known to go on shopping binges for high-quality consumer products on trips to countries like Japan.

The benchmark Shanghai Composite Index closed little changed, and the big-cap CSI 300 Index slipped 0.4 percent.

©2018 Bloomberg L.P.