(Bloomberg) -- Chinese liquor giant Kweichow Moutai Co. briefly overtook Industrial & Commercial Bank of China Ltd. as the nation's biggest stock by market value.
The distiller, which makes baijiu out of sorghum and wheat from southwest China, saw its market capitalization surpass that of ICBC during Friday trade before closing slightly behind at 1.809 trillion yuan ($256 billion), versus ICBC's 1.813 trillion yuan. Moutai's stock finished up 1.9%, hitting a fresh record high.
Moutai's rally is notable at a time distillers globally are grappling with restaurant shutdowns and curbs on social gatherings as a result of the coronavirus pandemic. Its ability to keep raising retail prices has encouraged investors and allowed the company's stock to keep rising. Its share price is the highest in China, ending Friday at 1,439.84 yuan apiece.
In contrast, ICBC has been weighed down by the prospect of narrower margins as China pushes for lower borrowing costs to bolster the pandemic-stricken economy. The company saw its slowest profit growth since 2018 in the first quarter, and the government this week called on the financial industry to sacrifice 1.5 trillion yuan of profit this year to support China's economy.
Moutai's steady rise looks modest compared to that of PetroChina Co., which became the world's first trillion-dollar firm in 2007 -- before it tanked over the following 10 years. It lost about $800 billion in market value in that time, as China moved away from a commodity-intensive development model and curbed the kind of speculative trading that helped drive up PetroChina's shares.
Its Shanghai-listed stock has lost 60% over the past 10 years, the worst performer in a gauge of Shanghai's 50 largest stocks, while Moutai has surged about 1,350% to be among its best. The liquor maker, which is trading barely 1% below the consensus target price, remains one of China's highest-rated stocks onshore with 89% of analysts giving it a buy recommendation.
©2020 Bloomberg L.P.
With assistance from Bloomberg
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