China’s decision to end its one-child policy after 35 years has created a whole new class of baby boomers in the stock market.
Stocks in baby-related companies, from infant formula to strollers, have been spiking since the Communist Party raised its population control ceiling to two kids per family, a move to combat an aging workforce amidst a slowing economy.
Analysts at investment bank Credit Suisse estimated that the new ruling could lead to six million more babies born annually in the five-year period starting in 2017, and that means more products would be needed to sustain these added baby steps. Among the stock market’s biggest growth spurts: infant formula maker Biostime International rose around 15% on the Hong Kong stock exchange, while China Child Care Corp, which makes hair and skin care for kids, saw stocks rise by 33%.
Other winners include infant formula company Yashili International (up 7.7%), education services provider Shanghai Xin Nanyang (up 10%) and stroller manufacturer Goodbaby International (up 6.3%).
However, some investors are cautioning against joining the crowd. On news that shares in Mead Johnson—kids nutrition giant and owner of the popular infant formula brand Enfamil—have risen 3.8%, Nomura equity analyst David Hayes wrote in a note to clients that:
There have been losers in the aftermath of China’s policy change, however. Shares in Japanese condom maker Okamoto Industries have fallen by 5% on the Tokyo stock exchange since news broke.