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The Bellamy’s Australia Ltd share price just fell 10% on China worries

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The Bellamy’s Australia Ltd (ASX: BAL) share price fell nearly 10% today despite the organic baby formula business releasing no news to the market.

Yesterday The Motely Fool’s James Mickleboro reported how a note out of Goldman Sachs suggested Bellamy’s could face unexpected delays in getting Chinese product registration approval to sell Chinese labelled product in Australia.

Given Bellamy’s significant leverage to the Chinese market it’s not surprising that investors are heading for the exits, with China being an unpredictable market full of risk thanks to its communist system of one-party government, where the rule of law exists in a different way to the west.

Bellamy’s share price has now nearly collapsed in half since it a high above $23 earlier in 2018, as baby formula sales remain volatile thanks partly to their reliance on entrepreneurial Chinese shoppers attempting to sell on the product at a mark up.

There other salient factor is that this is now a competitive space with the a2 Milk Company Ltd (ASX: A2M) household goods giant Nestle and even vitamins merchant Blackmores Limited (ASX: BKL) fighting for market share among many others.

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Motley Fool contributor Tom Richardson owns shares in a2 Milk and Blackmores. 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.

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