• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Market Analysis Latest ASX News

What Does China’s Child Policy Mean for Bubs Share Price? (ASX:BUB)

Like 0

By Lachlann Tierney, Wednesday, 02 June 2021

After soaring on Tuesday, Bubs Australia Ltd’s [ASX:BUB] share price is currently down 7% today as the market assesses China’s child policy...

After soaring on Tuesday, Bubs Australia Ltd’s [ASX:BUB] share price is currently down 7% today as the market assesses China’s child policy.

BUB shares jumped over 20% to 41 cents on Tuesday, prompting an explanation from the ASX.

In response, the infant formula company pointed to news that the Chinese government will replace its two-child policy with a three-child policy.

Despite yesterday’s gains, the BUB stock is still down 35% year-to-date and has underperformed the ASX 200 benchmark by 85%.ASX BUB - Bub Share Price ChartSource: TradingView.com

BUB and demand for infant formula in China

When prompted by the ASX to explain BUB’s recent share price action, the company offered this explanation:

‘The Company is aware, via publicly reported news articles, that the Chinese government today announced it is scrapping a policy limiting couples to two children, and will now permit families to have three children without financial penalty with the formal introduction of a third-child policy.

‘The Company is aware that the policy announcement has been widely reported, both internationally and in Australia, including across the Australian Financial Review and ABC News.’

The market reacted positively to this development, as Bubs has a big exposure to the Chinese market.

The idea is that if the policy leads to a rising birth rate, it could lead to a rising demand for infant nutrition products.

As a2 Milk Company Ltd [ASX:A2M] itself admitted in its interim report for the six months ended 31 December:

‘Volume growth for the overall infant nutrition market in China was broadly flat in CY20, impacted by pantry destocking, COVID-19 disruption and a lower birth rate.’

However, while the policy is an admission by the Chinese government that the country’s birth rate is declining, it’s no guarantee the policy will be significantly adopted.

Will China’s new policy work?

As The New York Times reported overnight, while China’s state news media hailed the government’s announcement, the reaction across much of the country was indignation.

‘Women worried that the move would only exacerbate discrimination from employers.

‘Young people, who have barely been able to afford homes and necessities for themselves, were fuming.

‘Working-class couples said it would be impossible.

‘On Weibo, users complained of mounting education expenses, sky-high housing prices and unforgiving work hours, and pointed out a shortage of childcare options.

‘Some millennials are choosing a kid-free lifestyle, and many men are having vasectomies to ensure they remain childless.’

So while the market was initially buoyed by China’s announcement last night, BUB shares retracing today suggests that some investors are sobering up to the possibility that the three-child policy may not have a material medium-term effect on infant formula demand.

If you’re looking for how to navigate this wild and low-interest rate environment or are smarting from going long on Bubs shares, I recommend watching Greg Canavan’s ‘Life at Zero’ presentation.

There are plenty of great insights and he also shares his favourite stock for 2021.

Watch it right here.

Regards,

Lachlann Tierney,

For Money Morning

PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here

 

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Lachlann Tierney

Lachlann’s Premium Subscriptions

Publication logo
Fat Tail Investment Research

Latest Articles

  • As Political Dumb-Wits Beat the Drums of War: Keep Commodities Front and Centre
    By James Cooper

    In today’s edition, James Cooper looks at the growing hostilities between Pakistan and India through the lens of the commodity cycle. And why it could matter more than most think.

  • The share market bears have no answer to this…
    By Callum Newman

    I came across a handy bit of info from Wilson Asset Management yesterday. Wilson says that there’s strong demand for Chinese assets despite the recent volatility and trade tensions. Why do we care? There could be profit in this.

  • The method in Trump’s tariff madness
    By Jim Rickards

    Trump is pursuing a twenty-first-century version of what was originally known as the American System. A system that made America great in the first place.

Primary Sidebar

Latest Articles

  • As Political Dumb-Wits Beat the Drums of War: Keep Commodities Front and Centre
  • The share market bears have no answer to this…
  • The method in Trump’s tariff madness
  • The first place to look thanks to the US/China truce
  • The trade war is over. Tax cut chaos is next.

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988