China’s two richest people lose billions on consumer stocks

(Bloomberg) — Record sales of shares in two of China’s biggest consumer companies wiped more than $18 billion from the wealth of the nation’s richest people, underscoring deep investor concern about the health of China’s largest economy. Asia.

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China’s richest person, Nongfu Spring Co. founder Zhong Shanshan, lost about $4 billion as shares of the beverage giant fell as much as 12.9 percent in Hong Kong on Wednesday, according to the Bloomberg Billionaires Index, leaving him with a total of 45.5 billion dollars.

Meanwhile, PDD Holdings Inc. founder Colin Huang’s fortune fell by $14.1 billion on Monday as shares fell the most in the company’s history after he warned that revenue growth would inevitably decline. The pullout was Huang’s biggest one-day loss ever, dropping him to fourth in the Bloomberg rankings after briefly holding the top spot earlier this month.

The decline continued on Tuesday, when shares in owner Temu fell another 4.1 percent, taking another $1.4 billion off Huang’s wealth. Pony Ma, the co-founder of Tencent Holdings Ltd., now holds the second spot on the Bloomberg tracker.

Their declines in wealth underscore long-term shaky confidence in Chinese consumption, where many of the world’s biggest businesses are facing a slowdown in demand. The scramble for increasingly frugal shoppers has fueled steep price cuts, leading to margin-eroding products such as a new purified water sold by Nongfu for less than 1 yuan ($0.14) each.

“China’s economy is probably worse than people think if consumer companies like Nongfu and PDD don’t do well,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “They represent segments where demand should be resilient – ​​drinks and value for money.”

Both firms also faced a number of public relations challenges this year. Nongfu has been criticized on Chinese social media following the death of Zong Qinghou – the main founder of rival Hangzhou Wahaha Group Co. – some users stating that Nongfu intended to gain an advantage over its competitor. Months later, a report by the Hong Kong Consumer Council questioned the quality of Nongfu’s water, which it later clarified.

PDD faced a backlash last month when hundreds of traders staged a rally outside its offices in southern China, protesting against unfair penalty charges imposed by the company. And there is growing regulatory scrutiny over its e-commerce giant Temu, with the European Union working on a proposal to close an import tax loophole for cheap goods bought online.

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Nongfu’s revenue from its packaged drinking water products fell 18 percent in the first half, with the segment’s share of total revenue falling to about 39 percent from about 48 percent last year. The decline was attributed to negative public opinion of the company and Zhong since late February.

Nongfu and PDD “have competitors aggressively chasing market share,” said Li Xuetong, a fund manager at Shenzhen Enjoy Investment Management Co.

“One thing is certain, the two firms, which investors have been happy to rate as leaders in their respective fields, are not immune to the cutthroat competition seen in other industries – and investors seem to be rethinking how safe it is their perch,” Li said.

–With the assistance of Lulu Shen.

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