The manufacturers of strollers, car seats and baby formula could have a field day by the decision of China to shift away from its one children policy and to allow families to have three children.
Whether it would lead to boom in those industries or not is not yet clear but investors were apparently optimistic about the possibility.
Following the announcement by the Chinese government of the major change to its family planning policy as a part of the efforts of the country to avert a demographic crisis, there was a surge in the stocks of companies linked to baby products and maternity services in mainland China and Hong Kong on Monday.
There was a 31 per cent jump in the stocks of Goodbaby, a company that makes children’s products, in Hong Kong while a 15 per cent jump in the stock price of Suzhou Basecare Medical Co., which offers genetic testing for couples looking to undergo IVF, was also seen.
There was an almost 18 per cent jump in the stocks of Jinxin Fertility Group, which provides assisted reproductive services, while a 22 per cent surge in share price was seen for the stocks of Aidigong Maternal & Child Health, which offers maternity health services.
An 8 per cent jump in the stocks of Beingmate, a major infant formula manufacturer, was seen in Shenzhen while a 10 per cent surge in the stocks of Goldlok Holdings, which makes electric trains and dolls, was reported from Mainland China.
Clothing maker Lancy was up 7 per cent. Hong Kong’s broader market indicator the Hang Seng (HSI) rose by just 0.1 per cent on Monday, while the Shenzhen Composite rose by just 1.1 per cent.
The decision to allow its citizens to have up to three children was taken by the Chinese Communist Party’s top leadership at a meeting Monday even though when the policy change would be implemented was not spelled out by the Chinese state media reports.
It was just weeks ago that the 2020 census was published by Chinese authorities which showed that the rate of growth of China’s population was the slowest in decades. That meant a growing old age population which would put significant pressure on the e3oncomy of a country that is overly reliant on a young workforce for supporting an aging population and to keep up with the government set goals for economic growth.
It has been more than 35 years that the one child policy was implemented in China to bring the issue of overpopulation and poverty under control.
The Chinese government had in 2015 relaxed the restrictions to allow up to two children per family but that was not successful in raising the birth rate in the country which dropped to almost 15 per cent year-on-year in 2020.
(Adapted from CNN.com)