Chinese Liquor Industry Enters "Contraction Cycle"! E Fund CSI Liquor Index ETF (03189.HK) Swings Intraday, Dips 0.3%

NewTimeSpace News: Recently, Kweichow Moutai delivered its first annual earnings report since listing with both revenue and net profit declining year-over-year. Upon the announcement, the market was in an uproar, with even pessimistic voices emerging that the industry's "growth myth has shattered."E Fund CSI Liquor Index ETF(03189.HK) swung intraday, dipping slightly by 0.3%; the fund's overall performance has been relatively muted since the start of the year, with a gain of -8.04%.

Last week, Shede Spirits and Jin Hui Liquor were the first to disclose their Q1 reports, with revenues declining approximately 6% and 1.5% respectively, and net profits attributable to parent company falling 33.1% and 12.5% respectively. However, on the day following the Q1 disclosure, Shede Spirits' share price rose 1.6% instead of falling, while Jin Hui Liquor dropped less than 0.4% (affected by sector sentiment), with its share price rising 2.3% last week.

Hong Kong Stock Exchange data shows that this fund is the first exchange-traded fund in the Hong Kong market dedicated to the mainland Chinese baijiu industry, closely tracking the CSI Baijiu Index. The CSI Baijiu Index takes the CSI All Share Index as its sample space, selecting listed company stocks involved in baijiu production as constituent stocks, providing the market with diversified investment targets. The top ten weighted constituents include leading baijiu enterprises such as Kweichow Moutai, Wuliangye, and Luzhou Laojiao.

New Space-Time's analysis found that as of March 2026, the CSI Baijiu Index's PE (TTM) stood at approximately 18x, at the 3.14th percentile over the past 10 years. Specifically, Kweichow Moutai's PE was approximately 19.4x (a 10-year low).

Looking ahead, Guosen Securities stated that baijiu earnings expectations are being decompressed, with destocking declines stabilizing and narrowing, and increasing bottom signals emerging for the sector. The inflection point in distillers' operations may diverge within the year. Q1 2026 baijiu sector performance is expected to continue the downward trend, but the magnitude of decline will narrow quarter-over-quarter compared to Q3-Q4 2025. It is recommended to focus on the extent of earnings clearance in Q4 2025 and Q1 2026; distillers with better inventory destocking, stabilized price performance, and earlier and more thorough adjustments are expected to be the first to reach an inflection point.

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