ONE of China’s most potent symbols of luxury spending at home — the fiery liquor churned out by Kweichow Moutai Co. — was dealt a US$10 billion blow to its market value yesterday, the latest firm to be hit by anxiety over a pullback in spending by shoppers.

Moutai, which makes the baijiu liquor that’s often prized as a luxury gift, saw its shares plunge to the daily limit after disappointing earnings stoked pessimism. The company Sunday posted its slowest quarterly profit growth in almost three years.

Moutai shares, along with those of rival Wuliangye Yibin Co. and Jiangsu Yanghe Brewery Joint-Stock Co. fell by the daily limit of 10 percent yesterday. Shares of Luzhou Laojiao Co., another liquor maker, tumbled as much as 8.6 percent.

The plunge in Chinese liquor stocks came amid a broad selloff of consumer stocks in China’s A-share market, with a gauge tracking major consumer staples stocks tumbling as much as 8.7 percent yesterday.

The tumble of the world’s most valuable distiller and other Chinese liquor makers heightens concerns that jittery Chinese consumers have turned conservative, with luxury goods now also affected by angst over the outlook of the world’s second-biggest market. China’s economy, which grew at its slowest pace since the aftermath of the global financial crisis in 2009, faces deepening trade tensions with the United States and a slumping stock market.

While many analysts still have “buy” ratings on Moutai and the consensus 12-month target price on the stock represents a return potential of nearly 53 percent based on current prices, its higher-than-average valuation and slowdown are raising investor concerns on its ability to meet high growth estimates going forward.

Moutai was downgraded to “accumulate” from a “buy” by Zhongtai Securities yesterday while its target price was lowered by CICC analysts. The company’s 4 percent revenue increase in the third quarter was well below analyst estimates.

Though CICC expects Moutai’s revenue growth to rebound in the fourth quarter, the firm lowered Moutai’s earnings forecasts for this year and 2019 on concern the liquor maker may miss its forecast again if its short-term liquor supply doesn’t improve.

Moutai and other liquor makers also face the risk of possible government measures to curb alcohol consumption as part of a health drive, which may continue to weigh on investors. (SD-Agencies)