(Bloomberg) -- Australian cannabis stocks more than doubled Thursday, almost matching gains made during the whole of last year, after the government said it would allow exports of medicinal cannabis.
The relaxation of export rules will help shore up the fledgling domestic industry amid increasing competition, Health Minister Greg Hunt said in a statement. A Bloomberg index of local pot stocks based off a gauge from Red Leaf Securities surged 126 percent as of 1:42 p.m. in Sydney, just shy of last year's 132 percent gain.
“It's further vindication that the sector is becoming valid. It's not just a bunch of hippies anymore,” said John Athanasiou, chief executive officer at Red Leaf Securities. “We've just got to be cautious about which ones to pick.”
Shares of companies involved in the cultivation, production and research of medicinal marijuana have been on a tear as regulators relax rules around its use to create a cannabis-derived pharmaceutical industry.
Still, Australia's nascent cannabis sector is a sliver compared to the U.S., where eight states and the District of Columbia have legalized recreational uses of the plant. It's also facing stiff competition from Israel, which is keen to solidify its position as a global center for medical weed research, development and exports.
- Companies in the Australian index, based on a Red Leaf Securities gauge: AC8, BOT, CAN, CPH, ESE, MDC, MMJ, MXC, THC, RGI, ZLD.
To contact the reporter on this story: Matthew Burgess in Sydney at mburgess46@bloomberg.net.
To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Margo Towie
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