China's third-child policy boosts shares in toy, diaper makers

SHANGHAI: Shares in Chinese toy makers, diaper producers and infant food companies soared for the second day on Tuesday, as investors piled into stocks seen as benefitting fromChina's announcement on Monday to allow married couples to have up to three children - from the previous limit of two - also sent brokerage analysts scrambling to recommend stocks, despite a widely-shared perception that the policy shift won't have a sudden impact on the country's declining birth rate.

An index tracking the so-called"third baby concept" stocks, newly compiled by Hithink RoyalFlush Information Network, rose about 2.5 per cent on Tuesday, while China's benchmark stock index was roughly flat.Hu Yunlong, a Beijing-based hedge fund manager, said the sharp gains in such stocks were the result of"short-term speculation," as he sees limited immediate impact on corporate fundamentals.

Still, Xu Qi, investment adviser at Guosheng Securities, said Luolai Lifestyle Technology Co, which makes home textile products such as quilts and pillows, stands to benefit from the new policy. He also recommends Zhejiang Semir Garment Co, which makes children's clothes.

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