Government intervention can drastically affect how a business preforms. Newly implemented laws or policies may be detrimental to an unsuspecting business.
An example of this happing recently is when China announced that they were abandoning the multi-decade one child policy, the market value of condom companies have decreased significantly.
On the other hand, some companies will thrive, such as companies that make nappies, pushchairs and baby milk, whose shares have all risen in value and business is booming. One of the biggest beneficiaries in terms of the financial markets was China Child Care, which makes hair and skin care products for children, with shares “ending 40% higher on Hong Kong’s stock exchange on [Oct. 30]”.
This links to the topics discussed in class of current events and news affecting stock prices. Looking at the snapshot below from Google Finance we can see the significant increase in stock value on October 30. Looking to the right of the image, we are the new events that may be relevant to the price fluctuations and we can see that “Children-Related Stocks Surge After China Ends One-Child Policy” would justify it.
One month stock performance of China Child Care Ltd.
Sources:
[1] http://www.theguardian.com/business/2015/oct/30/condom-shares-fall-in-china-after-plan-to-end-one-child-policy
[2] https://www.google.ca/finance?cid=13122155