China’s Baby-Related Stocks Rise on Two-Child Policy

The demise of the one-child policy isn’t just good news for China’s couples hoping to have another child – it’s also a boon for the companies vying for their business.

On Thursday, several baby-related stocks surged ahead of the announcement by China’s official Xinhua News Agency that the notorious population-control policy will come to an end. Stroller and car-seat maker Goodbaby International jumped 7.4%, while infant-formula maker Biostimes rose 5.5%. Shenzhen-listed Beingmate Baby & Child Food also rose 4.8%.

The policy move had been rumored in several Chinese state-run media outlets, including the 21st Century Business Herald, which reported that China’s National Health and Family Planning Commission had recently held internal discussions related to an “adjustment of birth policy.”

Xinhua didn’t provide a time frame or any further details about the move to a two-child policy.

Two years ago, when Chinese authorities eased the country’s reproductive policy so that married couples could have two children if at least one spouse is an only child, there was a similar stock bumpin anticipation of a baby boomlet. Infant formula, diaper and even piano companies jumped on the day after the news of the policy shift, while shares of one contraception company were slightly down.

Those expectations, however, proved to be off-the-mark. Officials had projected a two-million rise in new births in the year after the policy tweak—yet only 804,000 couples had applied by the end of September 2014 to have a second child. The relaxing of the rules in 2013 meant that an estimated 11 million Chinese couples were newly eligible to have additional children, but less than 7% opted for a new baby by late last year, according to one demographer’s calculations.

Thursday’s move to fully convert the one-child policy to a two-child policy may likewise end up falling short of Beijing’s hopes, experts say. That means that China’s leaders will once again be headed back to the drawing board in figuring out ways to give the country new life.

Text: The Wall Street Journel China Real Time  29-10-2015

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