Switcharoo: Blackmores, Bellamy's Down 30%, Dongfang Modern Up 90%
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The Chinese Government issued a new tax policy that included a list of products that would be allowed to enter the country’s free trade zones – the 'Positive List’. This sent shudders through the leading group of ‘Chinese Supplies’ on the ASX, Bellamy’s and Blackmores being the two flagships of this group.
Blackmores (BKL) is down about 25% since the announcement, Bellamy’s (BAL) is up 5%, while Dongfang Modern Agriculture Holding Group are up 25%. See the chart below (DFM Blue, BKL green, BAL red)
Bellamy’s share price stabilised after it made an ASX announcement stating “Infant formula was included in this ‘Positive List’ subject to having China Food and Drug Administration (CFDA) registration.”
Although the big winner has been Dongfang Modern (DFM) as new investors pour into the shares speculating this is just an early warning from the Chinese Government of further changes to come. The key difference here is that DFM is operating and producing from within China.
DFM is the second largest harvester of citrus and camellia products in the world's largest agricultural market, China. DFM harvests its products from 19 plantations spanning some 8000 hectares, all located within China's premier fruit growing region, the Jiangxi Province.
Are these investors onto something? The last 6 months would suggest they are. See the chart below (DFM Blue, BKL green, BAL red)
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Christopher is head of equites at Spring Financial Group. Christopher has over 10 years' experience managing equities desks with thousands of retail clients and responsibility for maintaining and servicing retail and wholesale relationships.