Why A2 Milk Company Ltd (ASX:A2M) and Bellamy's Australia Ltd (ASX:BAL) shares are surging higher

Here's why A2 Milk Company Ltd (ASX:A2M) and Bellamy's Australia Ltd (ASX:BAL) shares are surging higher on Thursday…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The A2 Milk Company Ltd (ASX: A2M) share price and Bellamy's Australia Ltd (ASX: BAL) share price have been among the best performers on the market on Thursday.

In early afternoon trade the a2 Milk Company share price is up almost 9% and the Bellamy's share price is 5.5% higher.

The Blackmores Limited (ASX: BKL) share price is also climbing notably higher and is up 5% at the time of writing.

Why are these shares racing higher today?

Investors have responded positively to news out of China in relation to tough new e-commerce laws.

According to the Chinese government website, the State Council has decided not to implement new e-commerce laws on January 1 and will instead refine its existing policies.

There had been concerns that these new laws could have impacted the sales of exporters like a2 Milk, Bellamy's, and Blackmores.

What is happening on January 1 now?

From January 1 the Chinese government will extend the current Cross Border E-Commerce (CBEC) policy framework. This means that imported items will continue to be viewed as "Personal Use" items and will not require registration or first import licence approval.

In addition to this, tax benefits and transaction limits remain favourable. According to a note out of Goldman Sachs, imported items through the CBEC channel will continue to enjoy tax benefits and the personal transaction limit will increase to RMB5000 from RMB2000 for a single transaction and to RMB26K from RMB20K for the annual limit.

Below is a quick summary of the changes.

Source: Goldman Sachs

Is this good news?

I believe this is a big positive for companies exporting to China and takes that element of doubt out of the equation. Because of this, I can't say I'm surprised to see the shares of a2 Milk, Bellamy's, and Blackmores surge higher today.

I felt a2 Milk Company and Bellamy's were buys prior today, but this news just sweetens the deal now in my opinion.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a great end to the trading week for ASX investors today.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

3 ASX 200 stocks smashing the benchmark this week

These three ASX 200 stocks are leading the charge this week. Here’s how.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why A2 Milk, EOS, GQG, and Mineral Resources shares are racing higher today

These shares are ending the week strongly. But why?

Read more »

A man wearing a red jacket and mountain hiking clothes stands at the top of a mountain peak and looks out over countless mountain ranges.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another disappointing day for ASX investors this Thursday.

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Share Gainers

Why Pinnacle, PWR, Race Oncology, and Vulcan shares are flying today

These shares are having a good session on Thursday. But why?

Read more »

A beautiful woman holds up one finger with one hand and has her hand on her waist with the other as she smiles widely as though she is very pleased about something.
Share Gainers

Why Boss Energy, Emeco, Mineral Resources, and Plenti shares are pushing higher today

These shares are having a good time on hump day. But why?

Read more »

Three small children reach up to hold a toy rocket high above their heads in a green field with a blue sky above them.
Share Gainers

3 ASX 300 shares going gangbusters on Wednesday

Investors are bidding up these three ASX 300 shares today. But why?

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a huge Tuesday for ASX shares, with the index resetting its record high.

Read more »