HK Stock Market Move | Dairy industry stocks rise against the trend. Citigroup believes that anti-subsidy measures for dairy products will help alleviate the domestic surplus of raw milk supply.

The dairy industry stocks are rising against the trend. As of the release of this article, CH MODERN D (01117) has risen by 3.8% to 1.64 Hong Kong dollars, while YOURAN DAIRY (09858) has risen by 3.44% to 5.11 Hong Kong dollars. Citigroup has released a research report stating that the Ministry of Commerce of China recently announced temporary anti-subsidy measures on certain dairy products imported from the European Union, imposing temporary tariffs ranging from 21.9% to 42.7%. This mainly involves fresh milk, cheese, curd, and whey products. According to Citigroup's estimation, the European Union accounts for 20.7% of the import volume of these products. Due to lower domestic production costs compared to imports, it is expected that the European Unions share of these products will be replaced by domestic solid dairy processing businesses, which will help alleviate the domestic surplus of raw milk to a certain extent. Citigroup believes that YOURAN DAIRY, with its main customer Yili leading the domestic solid dairy industry, will benefit from the development. It is expected that this measure will boost domestic demand for raw milk, and high-end and specialty dairy products can better meet the demand for consumer upgrades downstream. Huachuang Securities pointed out that the subsidy rate of around 30% significantly increased the cost of relevant EU imported products; in terms of implementation efficiency, the policy took effect immediately the day after its publication, demonstrating the resolve of the relevant departments to stabilize the market, and the impact is expected to quickly spread to the market.