Investors seeking to capitalize on the growing demand for baijiu in China can now do so through an Exchange Traded Fund (ETF) launched on the Hong Kong stock market. The E-Fund CSI Liquor Index ETF, launched by E-Fund Management, tracks the CSI Liquor Index and contains shares of companies listed in both Shenzhen and Hong Kong that derive the majority of their revenue from alcohol production and distribution, with baijiu accounting for 95% of alcohol consumption in China.
As of the end of last month, the fund had 18 shares, with the largest positions held by Wuliangye Yibin (16.1%), Luzhouy Lao Jiao (15.6%), Kweichow Moutai (14.4%), Shanxi Xinghuacun Fen Wien Factory (14.3%), and Jiangsu Yanghe Brewery (11%). These companies have seen their shares grow in value significantly over the past seven years, with Kweichow surpassing Diageo in value in 2017.
However, investors should be aware that baijiu shares are vulnerable to wide fluctuations and are subject to legislative changes from Beijing and local governments. Despite this, the growing demand for baijiu in China presents a significant investment opportunity for those looking to take advantage of this trend.