Shares of companies that make diapers, baby strollers and infant formula got a boost from China’s decision to scrap its one-child policy. But for the maker of a popular brand of condoms, it was not the brightest of days.
Investors are betting on a bump in sales for companies with baby or child-related businesses after China’s Communist leaders announced that all married couples would be allowed to have two children. The economic waves travelled as far afield as New Zealand, where the currency of the dairy exporting country surged.
Analysts at investment bank Credit Suisse estimated that the relaxed controls would result in an extra 3-6 million babies born annually in the five-year period starting in 2017. China, the world’s most populous country with nearly 1.4 billion people, has about 16.5 million births each year.
The one-child policy began in 1979 to curb a surging population at a time when extreme poverty was widespread in China.
Japanese condom maker Okamoto Industries Inc., a favourite of Chinese visitors to Japan, slumped 10% in Tokyo.
Formula makers in mainland China rose strongly, led by Beingmate Baby & Child Food Co., which jumped 10% on China’s smaller Shenzhen stock exchange.