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Maotai Bubble Collapses

In March 2012 I wrote: Chinese Maotai bubble bursts!, which discussed the government crackdown on officials blowing public money on extravagant banquets, with much of the cash flowing into luxury goods such as the high priced Maotai baijiu.

I was early with my call: Maotai shares ran from 200 up to 260 yuan before the top was reached, but with shares collapsing to 150 yuan yesterday, it's clear that the call was the right one. The reason for the latest drop on Monday, a 10% limit down plunge: Baijiu-Maker Kweichow Moutai Sobers Up

Kweichow Moutai Co.'s shares plunged by the 10% daily limit in Shanghai on Monday morning, after the company reported its slowest half-year gain since 2001. The maker of moutai, a high-end baijiu, or white liquor, said Friday its first-half net profit rose 3.6%.