The rocky road back to China

The rocky road back to China


Business
Bellamy's shares were suddenly suspended from trading on the stock market on Friday while the company scrambled to find out why the Chinese had suddenly suspended Camperdown Powder’s licence to export.

Bellamy's shares were suddenly suspended from trading on the stock market on Friday while the company scrambled to find out why the Chinese had suddenly suspended Camperdown Powder’s licence to export.

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The Punter was quite happy with his purchase of shares in Bellamy’s Australia... until last Friday.

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Punter is THe Land’s longetemr The Punter was quite happy with his purchase of shares in Bellamy’s Australia, the infant-formula company... until last Friday.

Then the shares (ASX code BAL) were suddenly suspended from trading on the stock market while the company scrambled to find out why the Chinese had suddenly suspended Camperdown Powder’s licence to export to the world’s most populous nation.

Bellamy’s only recently spent $28.5m to buy 90 per cent of Camperdown, largely in order to acquire its Chinese licence.  The deal was designed to ”strengthen Bellamy’s competitive position by addressing trade and consumer concerns regarding the China Food and Drug Administration (CFDA) registration”.

The air in the Bellamy boardroom must have been blue when the word of the suspension came through.

At the time of writing, it was not clear how long it would take to find out exactly why the licence was suspended or what impact it would have.  The Punter could only console himself with the thought that “suspension” is not quite the same thing as “cancellation”.

The air in the Bellamy boardroom must have been blue when the word of the suspension came through.

He also takes some comfort from the company’s statement that the suspension does not impact the sale of its products, which are currently manufactured by Fonterra and Tatura Milk (Bega) under their respective CNCA licences.

On the basis of orders already placed on the market, the shares may resume trading around $6.29 a share. That’s down nearly 7pc on the last closing price, but still above the recent rights issue price of $4.75.

The Punter’s other consolation is that he resisted the temptation last week to dump his shares in Lithium Australia (LIT).  Revised data relating to its proposed pilot processing plant suggest it will be even more profitable than initial estimates suggested. The news doubled the share price in two days.

Twice last week the market fell by more than one per cent a day. It would be easy to blame tensions over the Qatar crisis and the North Korean missile launch, but the puzzle with that explanation is that the gold price has been falling, not rising like a good safe haven should.

• The Punter has no financial qualifications and no links to the financial industry.

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