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China dairies see investors dump stocks

By Du Wenjuan (Chinadaily.com.cn)
Updated: 2008-09-23 17:38

Products of China Mengniu Dairy Co. Ltd. are displayed at a press conference to announce the company's interim results in Hong Kong Friday, Sept. 19, 2008.The price ofMengniu,China's largest dairy producer in volume, dived 64.6 percent to 7.68Hong Kongdollars Tuesday at the Hong Kong Stock Exchange.[Agencies]

China's three leading dairy companies, in the swirl of the tainted milk scandal, saw their stock prices plunge Tuesday.

The price of Mengniu, China's largest dairy producer in volume, dived 64.6 percent to 7.68 Hong Kong dollars Tuesday at the Hong Kong Stock Exchange.

Special coverage: Tainted Milk Scandal Related readings: Shijiazhuang party chief sackedChina takes milk scare 'very seriously' Quality watchdog chief quits 13,000 babies hospitalized

Yili Group, another heavyweight dairy headquartered in Inner Mongolia, north China, saw its shares tumble at the Shanghai Stock Exchange by the daily limit of 10 percent and closed at 9.93 yuan.

Investors also dumped the stocks of Shanghai-based Bright Diary, the No. 3 dairy producer in China. Its shares plunged to 4.03 yuan or 10 percent.

Analysts predict that the three dairies' stock will be on a continuous free fall, and begin to question the possibility of survival for the three dairies, as the government has not decided to give them a policy support.

In the wake of a baby milk formula scare with the local dairy producer called Sanlu, based in Shijiazhuang, Hebei Province, adding industrial chemical melamine to the formula and hospitalizing about 13,000 Chinese children, the state quality supervision authorities have, in their expanded investigations, found similar melamine contents in products of the three leading dairies.

Chinese consumers have been infuriated by the scandal, and investors have chosen to dump their stocks.

Compared with the bleeding of the above three dairies, Beijing-based Sanyuan Dairy's shares surged the daily limit of 10 percent at Shanghai bourse for the fourth trading day, up 46.67 percent in total since Thursday.

Sanyuan's milk was detected safe during the nationwide probe.

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