Insights

A2 Milk (ASX:A2M) share price falls as China suspends dialogue

The A2 Milk (ASX: A2M) share price has taken a hit in the market after China suspended all talks with Australia. Let’s take a look.
The post A2 Milk (ASX:A2M) share price falls as China suspends dialogue appeared first on The Motley Fool Australia. –

A businessman holds his glasses in concern, indicating uncertainly in the ASX share price

The A2 Milk Company Ltd (ASX: A2M) share price is taking a hit on the ASX, down 3.10% at $7.20 at yesterday’s close and falling again in trade today. 

It’s the same story for other ASX companies with major trade deals in China as the People’s Republic suspends all talks with Australian trade and economic officials, including ministers.

Shares in Treasury Wine Estates Ltd (ASX: TWE), heavily engaged in trade with China, and others including Blackmores Limited (ASX: BKL), Bubs Australia Ltd (ASX: BUB) are all falling.

Let’s take a closer look at the developments and what they mean for the A2 milk share price, and others.

China suspends all activities under China-Australia Strategic Economic Dialogue

In a rare public statement, issued on Thursday, the Chinese National Development and Reform Commission said it would suspend indefinitely all activities under the China-Australia Strategic Economic Dialogue.

Citing Australia’s “Cold War mindset” and “ideological discrimination”, the Chinese agency took the dramatic step of ending all talks with Australian economic and trade ministries, effective immediately.

The move is the latest by China in the ongoing trade dispute between the East Asian giant and Australia. China has placed tariffs on Australian wine, barley, and beef, and blocked the importation of all Australian coal. Australia has passed foreign interference laws, blocked Chinese state-owned Huawei from accessing Australia’s 5G network, cancelled the Victorian government’s Belt and Road MoU with China and led the charge for an independent inquiry into the origins of the virus that causes COVID-19.

Companies like Treasury Wines have suffered greatly under the Chinese measures. While China has not targeted dairy, the A2 Milk share price has been suffering under Australia’s border closures. When the borders open, fears the China market may not be the same could be exacerbated by the recent developments.

The trade concerns have been simmering for some time now. As far back as May 2020, Australian ministers admitted their Chinese counterparts were not even returning their phone calls.

A2 Milk share price falls

So, could fears over Australia’s trade relations with China not returning to normal be impacting the A2 Milk share price?

A2 Milk’s premier sales product is its infant formula. In its half-year report for FY19 (pre-pandemic), the powdered product made up around 82% of all sales. Just under half of sales went directly to Asia. Sales in Australia and New Zealand were spurred on by the daigou market, which then on-sold the products to China.

A suspension of that trade and uncertainty over Sino-Australian relations is likely to take its toll on the A2 Milk share price, along with Blackmores, Bubs, and others highly exposed to the Chinese market.

But while China has put tariffs on many Australian industries, there is one sector it relies heavily upon and has not restricted: iron ore.

BHP Group Ltd (ASX: BHP), the largest iron ore exporter in Australia to China, is currently trading at $49.96, up 16% year-to-date.

At the time of writing, is A2 milk share price is trading at $7.13, down $39% since the start of 2021.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk, Blackmores Limited, and Treasury Wine Estates Limited. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post A2 Milk (ASX:A2M) share price falls as China suspends dialogue appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!