KWEICHOW Moutai, the iconic Chinese liquor giant, defied a global slump in alcohol demand by repeatedly hitting closing highs last week, as investors bet on a robust consumption recovery in China amid the pandemic.

Moutai’s share price surge underlines the low correlation between Chinese and global equities amid the economically damaging coronavirus crisis. It also eases worries about financial health of Guizhou, the local government owner of the world’s most valuable liquor maker.

Moutai shares hit record closing highs in six of the past eight trading sessions, buoying the company’s capitalization briefly past Guizhou’s 2019 GDP of 1.677 trillion yuan (US$236.18 billion) last week. The stock, China’s priciest, trades at around 1,300 yuan per share.

“The share price is a reflection of the company’s good fundamentals,” said Liam Zhou, founder of Minority Asset Management, who holds Moutai shares. Zhou, who uses behavioral finance to predict stock prices, expects Moutai shares to rise further.

Goldman Sachs analysts also thought the alcohol maker was in a good position.

“Despite the challenging environment during COVID-19 outbreak, we think the company could still maintain robust growth momentum thanks to its strong bargaining power,” Goldman Sachs wrote.

Moutai posted a 17 percent jump in net profit during the first quarter despite the epidemic.

In contrast, French spirits maker Pernod Ricard posted a 14.5 percent fall in sales during the quarter while Anheuser-Busch InBev suffered a 14 percent drop in core profit. London-based Diageo Plc has abandoned its annual forecast for sales and profit growth.

(SD-Agencies)