The Chinese market is getting closer to its first stock of 1,000 yuan

The booming stock market in China is approaching the presentation of its first 1,000 yuan. Four badysts monitored by Bloomberg expect Kweichow Moutai Co to arrive in the next 12 months. Stocks rose 47% this year, helped by higher sales defying any concerns about slowing consumption. The stock rose 2.4% Thursday, closing at 865 yuan ($ 129).
Companies around the world often divide their shares when prices are too high, thereby strengthening the badets of individuals and ensuring sufficient liquidity. But in China, a high-turnover market dominated by day traders, this has rarely been a problem for its biggest and most popular stocks.
About 4.5 million Moutai shares have changed hands every day on average this year, although investors have to buy them in multiples of 100.
"It's essentially a problem of market liquidity and investor structure," said Kinger Lau, principal equity strategist for Goldman Sachs Group Inc. in Hong Kong. "For a big cap and a foreign favorite, I would say the impact would be pretty small.
The A-share market in China has always been characterized by high liquidity. Stock splits are rare in China and occurred mainly in the 1990s, according to data collected by Bloomberg. A representative of Moutai did not immediately answer a call to find out if the company was considering splitting its shares. Moutai had already sparked a debate over whether a title costing 1,000 yuan could be a problem for traders. Local media said the Shanghai Stock Exchange was testing its systems to make sure there were no technical problems.
A spokesman for the exchange did not immediately respond to a request for comment as to whether such tests had been conducted this time.
Moutai has long been a favorite of foreign investors. According to data compiled by Bloomberg, they poured about 12 billion yuan into the stock this year until March through trading links with Hong Kong. Foreign trade accounted for an average of 36% of its daily turnover last month.
Changchun High & New Technology Industry (Group) is the second best-selling title in China, with 308.49 yuan.
Analysts at Goldman Sachs, Macquarie Group Ltd, Citic Securities Co and China Securities Finance Corp. all aim for a course of at least 1,000 yuan for Moutai. With a target of 1,016 yuan, Goldman would make Moutai the world's fifth most expensive stock outside the United States, according to Bloomberg's stock-based calculations of a daily volume of at least one million.
"Moutai has the highest brand power, high margins, the best return on capital and the best free cash flow in the Chinese sector," badysts at Citigroup Inc., Xiaopo Wei and Richard Wenjia Lin wrote in a note. last week.