What happened to the Blackmores share price?
Shares of Blackmores Ltd. [ASX:BKL] gained 14.24% today.
Why did BKL shares go on a tear?
8 April last year China announced it would be imposing tough new laws on foreign goods entering the country through cross-border e-commerce (CBEC). CBEC is a sales channel that allows businesses — like Blackmores — to sell directly to consumers bypassing local registration requirements to sell goods into China.
According to The Australian Financial Review, the cross-border trade into China is estimated to be worth 6.3 trillion yuan ($1.18 trillion). Since the announcement last year, Blackmore shares had slid in value from $203.99 to $98.63.
After some convincing from giants like Alibaba and JD.com — who also use the same sales channel — China has backtracked today, and decided to indefinitely delay the new taxes and tariff CBEC laws.
After the announcement, Blackmore shares had jumped up and were trading at $115.33. Bellamy’s [ASX:BAL] and A2 Milk Company [ASX:A2M] also so a big spike in their shares due to the news.
The announcement is quite timely, as Chinese Premier Li Keqiang is about to visit Australia to talk about free trade agreement and non-tariff barriers.
What now for Blackmores Ltd?
This is a big win for Blackmores. Yet Blackmores is not the only company that will benefit from this change. Any milk powder, cosmetics, wine and vitamin seller who takes advantage of this channel to sell to mainland China will also reap its rewards.
By Selva Freigedo