Childcare Subsidy Program Spurs Market Boost for Kid-Related Industries
Following the announcement of a national childcare subsidy program on the first day of the week, Tuesday witnessed a significant surge in the stock value of industries such as dairy, childcare-related products, and related services. Investors are predicting a potential upward trend owing to robust policy backing.
Markets witnessed the closing price of Beingmate Co, an A-share listed company, at 6.72 yuan ($0.94) per share on Tuesday, registering a rise of 3.54 percent. Jiangxi Sunshine Dairy Co similarly experienced growth with an increase of 9.98% to close at 14.99 yuan.
Meanwhile, Kidswant Children Products Co noted a slight increase of 2.24 percent closing at 13.69 yuan and Shanghai Aiyingshi Co witnessed a gain of 2.62 percent ending at 20.74 yuan, demonstrating the positive impact of the subsidy policy on kid-related companies.
Hong Kong-listed company, China Parenting Network Holdings, experienced a substantial growth ending with a doubling of their share price on Tuesday. This dramatic surge followed the announcement of a nationwide childcare subsidy program that China is planning to rollout in 2025.
Detailed out on Monday, this subsidy program promises to provide families with 3,600 yuan on an annual basis for every child less than three years old. One of the hallmarks of this program is that the subsidies won’t be subject to individual income tax nor will they be considered as household or individual income for determining eligibility of various assistance programs.
For instance, such subsidies won’t factor into the calculations regarding subsistence allowances or the classification of people who are experiencing extreme hardship. This policy has been designed to bolster birth rates and stimulate overall consumption and economic growth. It is expected to notably benefit industries like dairy, infant products, and foundation and high school education.
A study conducted by CITIC Securities brought to light the intricate connection between infant formula and childcare policies. Effective childcare subsidies are anticipated to directly invigorate demand for infant formula while a robust demand surge in dairy could serve to balance the supply-demand equation for raw milk.
This positions the dairy sector to primarily benefit from the childcare subsidies. In the retail landscape of mother and baby products, subsidies have the promising advantage of increased fertility rates leading to improved store sales.
Burgeoning birthrates due to policies such as childcare subsidies have the potential to effectively expand the user bases for manufacturers of infant products. Postnatal care and sectors related to it can also expect a beneficial impact due to an increased willingness among people to have more children, thereby augmenting sector growth.
Increasing household disposable incomes through childcare subsidies would naturally result in boosted demand for maternal and infant products. This could potentially drive industrial expansion, product whittling, and the launching of more sophisticated versions of existing products.
The subsidy policies are also expected to potentiate early education and stimulate interest-based learning and training thus catalyzing future growth in vocational and higher education sectors.
Considering the annual subsidy of 3,600 yuan for every child, the total payout could estimate at approximately 101.2 billion yuan annually. This implies that the new policy could potentially unlock in excess of 100 billion yuan in yearly consumption growth.