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Shares Of China's Largest Listed Company Evaporated $ 25 Billion In Just One Day

Shares Of China's Largest Listed Company Evaporated $ 25 Billion In Just One Day

Kweichow Moutai Company has dropped the most in nearly 2 years on the session yesterday 16-7.

Moutai, China's largest domestic listed company, fell 7.9% in it’s worst-ever decline since October 2018, wiping out $ 25 billion, a record evaporation.

According to a comment by a WeChat account owned by the People's Daily, Moutai's products are often related to corruption cases by officials of the country and used to bribe with expensive.

The drop has resonated on the Chinese stock market by nearly $ 10 trillion, with the nation's largest companies' SSE 50 Index falling 4.6%, the worst decline since early February.

Other winemakers also plummeted, with Wuliangye Yibin Co., Jiangsu Brewery Joint Stock Company and Luzhou Laojiao Company all dropping 10% every day.

Zhang Gang, a strategist at China Securities Company, said Moutai is an overheating investment target and if this bubble continues to accumulate, the consequences will be terrible if it bursts. Policymakers do not want to repeat 2015 history.

A 5-year-old leverage bubble wiped out $ 5 trillion in capitalization, retail investors were burned and shaken confidence in the securities market regulator's oversight. 

Officials began taking measures to ease the current heat late last week after SSE 50 nearly reached its highest level in 2015. Government-owned funds announced plans to cut hold on the stock is skyrocketing.

Moutai, a distillery with a market value of $ 320 billion at its peak on Monday 13-7, makes it one of the largest companies in the world. Its stock has risen nearly 50% this year before plummeting on Thursday 16-7. Previously, there were doubling in 2019.

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