China shares up after one-child policy change, dairy stocks jump

CSI300 index up 0.2%, Shanghai Composite index gains 0.1%

China stocks were bolstered on Friday after the ruling Communist Party announced the government would partially relax its strict regulations on population control.

All couples would be allowed to have two children under the new policy, the government said late on Thursday. For most of the past several decades, most Chinese families were only permitted one child, although restrictions were eased in 2013.

The CSI300 index rose 0.2%, to 3,541.78 points at the end of the morning session, while the Shanghai Composite Index gained 0.1%, to 3,391.41 points.

China CSI300 stock index futures for November rose 0.1%, to 3,438.6, 103.18 points below the current value of the underlying index.

Equities were lifted by food and beverage manufacturing stocks, particularly dairy, and by the finance sector which had sold off heavily in recent days. Real estate and information technology stocks also moved higher.

"Obviously this is a big deal for the economy in the long term," said Zhang Yanbing, an analyst at Zheshang Securities in Shanghai.

"Dairy and baby-related stocks are all benefiting, and I expect real estate, education and healthcare to also get some support."

Beingmate, a Shenzhen-listed manufacturer of baby foods, was limit-up 10%, and other dairy stocks including Yili Company were also up sharply.

In Hong Kong, the Hang Seng index dropped 0.2%, to 22,775.25 points. The Hong Kong China Enterprises Index gained 0.1%, to 10,453.51.

The index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 129.92.

A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.

The northbound quota for the Hong Kong-Shanghai Stock Connect, currently set at 13 billion yuan, saw net outflows of 0.58 billion yuan.

Total volume of A shares traded in Shanghai was 12.04 billion shares, while Shenzhen volume was 15.75 billion shares.

Total trading volume of companies included in the HSI index was 0.6 billion shares.