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A2 Milk (ASX:A2M) has fallen so steeply that the company has issued a halt ahead of a further announcement, clearly after deciding a -10.5% drop, back to $8.40/sh, was enough bloodshed for one day. Or, y’know, it looks that way.
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And what’s causing the drop? As far as anybody’s best guess can tell, it’s got nothing to do with company fundamentals but a lot to do with exogenous risk – mainly that implied by the most recent dataset to come out on China’s birth-rate, which is at all-time-lows.
That matters for A2 Milk, a company with a value proposition long baked into Asian markets. The general thinking has always been that A2 Milk’s dairy products are superior in the Asian market because they are designed to be more gastro-friendly to Asian consumers. Whether or not the science around this is steadfast or piecemeal, it’s a market narrative everybody has long agreed to accept.
What that means for A2 Milk in the months ahead is anybody’s guess, and we’ll have to see what A2M hits the market with midweek when its trading halt lifts. But given the intensity of the sell-off on Monday, it would likely take a large announcement to reverse the damage done thus far. Time will tell.
A reminder here on birthrates: In the current moment, particularly in the proudly-right-wing-manosphere, there’s a lot of talk about the declining birth rate in the West, which really means the white birth rate.
But, narratives around a suppression of white identity fail to realise a larger truth about fertility measurements: They’re actually tied to education levels.
Because what drives fertility more than anything is (a lack of) sexual education – otherwise known as girls going to school. Consider where fertility rates are highest, and you quickly start to see the connection. Fertility always declines in developed societies because developed societies get to a point where the vast majority of children are educated, particularly girls, when it comes to sex education.
If you want a birthrate to go back up, that’s simple: Take girls out of school. Good luck getting that past a focus group.
Anyway, all of this is neither here nor there for A2 investors, but it’s a handy thing to remember when reading news about birth rates – China’s hardly on the brink of population collapse, but it may have plateaued.
In fact, China’s economic data, ever since COVID-19 lockdowns were lifted, also seems to suggest this; global analysts were in not-too-distant history just pondering if we’re seeing the “Japanification of China,” there referencing Japan’s rapid growth then sharp slowdown in the late 20th century.
A2M last traded at $8.40/sh.
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