China’s ‘national team’ ditches Kweichow Moutai in move that adds to valuation woes

China’s state-backed “national team” appears to be reducing its exposure to Kweichow Moutai, intensifying pressure on the country’s biggest baijiu liquor maker. The stock has lost more than 40 per cent from its peak five years ago. Central Huijin Investment, operated by China’s sovereign wealth fund, and China Securities Finance were absent from Kweichow Moutai’s top 10 shareholders at the end of the second quarter, according to the distiller’s first-half report. The disclosure followed a 1.95 per cent year-on-year decline in first-half profits, the first fall in interim results since the company listed in Shanghai in 2001. The change marks a notable shift from the first quarter. Central Huijin held 10.4 million shares and ranked fifth, while China Securities Finance held 4.03 million shares and ranked 10th. Their departure was not caused by other investors accumulating larger positions: 3.5 million shares were sufficient to qualify among the 10 biggest shareholders during the April-to-June period. The apparent unwinding suggests that influential state investors are becoming more cautious about Kweichow Moutai and the wider baijiu industry, once a preferred trading theme and emblem of China’s consumer sector. The industry has endured a years-long post-Covid downturn. The central government’s anti-corruption campaign has weakened demand through some traditional channels, while a deteriorating jobs market and changing consumption habits among younger consumers have added pressure. Both funds belong to China’s “national team”, a term investors use for state buyers that first intervened to stabilise the stock market after the 2015 rout. China Securities Finance is also a government-owned entity that supports brokerages in margin trading and short selling. For investors, the shareholder shift adds to concerns about valuation, earnings momentum and the durability of baijiu’s premium consumer positioning. Kweichow Moutai remains a major industry name, but the filing indicates that state support should not be assumed to offset weaker profits or changing demand.