The agricultural, livestock, and fishery sector experienced a notable upswing in today's (June 8th) trading session, moving against the broader market trend. The market's first Agricultural, Livestock, and Fishery ETF (159275) saw a rapid price increase after opening. At the time of writing, its on-exchange price has risen by 0.49%.
Regarding constituent stocks, shares in sectors like livestock farming and animal health led the gains. At the time of writing, Xiangjia Co., Ltd. hit the daily limit-up, while Xiaoming Co., Ltd. surged over 8%. Stocks such as Yisheng Co., Ltd., Huisheng Biology, and Minhe Co., Ltd. also posted significant gains.
Policy Catalyst for the Rally
The move follows a significant policy document issued by the State Council, titled the "Accelerating Agricultural and Rural Modernization '15th Five-Year' Plan." The plan outlines key targets for 2030, including stabilizing comprehensive grain production capacity at around 1.45 trillion jin, raising the contribution rate of agricultural scientific and technological progress to 67%, achieving a comprehensive mechanization rate for crop cultivation, planting, and harvesting exceeding 80%, maintaining the overall qualified rate for routine monitoring of agricultural product quality and safety at 98% or above, and increasing the added value of agriculture and related industries to 25.8 trillion yuan.
Analysis suggests that the implementation of this plan will systematically address bottlenecks in rural development, promote the two-way flow and balanced allocation of urban and rural resource factors, further strengthen the agricultural foundation, improve rural conditions, and safeguard people's livelihoods. This is expected to lay a solid groundwork for steadily advancing China's development as an agricultural powerhouse and achieving common prosperity. In the next steps, various departments and local governments are expected to roll out detailed supporting rules to ensure the effective implementation of key tasks and major projects.
Current Valuation Presents Opportunity
From a valuation perspective, the agricultural sector remains at a relatively low level, potentially presenting a favorable configuration opportunity. Data shows that as of the previous trading day's close (June 5th), the price-to-book ratio of the CSI All Share Agriculture, Livestock & Fishery Index, which the pioneering Agricultural, Livestock, and Fishery ETF (159275) tracks, stood at 2.12 times. This places it at the 0th percentile over the past five years, highlighting the attractive cost-effectiveness for medium- to long-term allocation.
Market Outlook and Investment Strategy
Looking ahead, Guojin Securities points out that in the short term, there is still room for a decline in hog prices. Recent industry capacity has already decreased under policy regulation and supply pressure, while prices have fallen below the full cost line. It is anticipated that industry-wide losses will lead to capacity reduction, with the sector's fundamentals currently stabilizing at a cyclical bottom. From a medium- to long-term perspective, the hog breeding industry is expected to maintain a relatively favorable central profit margin. Following the African Swine Fever outbreak, the industry's rapid expansion involved many companies increasing capacity with lower quality, resulting in a wide variance in costs across the sector. Leading enterprises possess significant potential for releasing excess profits. The recommendation is to prioritize high-quality companies with low operating costs.
Accessing the Full Industry Chain
For investors seeking exposure to the entire agricultural, livestock, and fishery industry chain, the market's first Agricultural, Livestock, and Fishery ETF (159275) warrants attention. According to statistics from China Securities Index Co., Ltd., this ETF passively tracks the CSI All Share Agriculture, Livestock & Fishery Index. Its top holdings include leading hog farming companies such as Muyuan Foodstuff Co., Ltd. and Wens Foodstuff Group Co., Ltd., and it also covers major sub-sectors across the industry chain, including feed, grain cultivation, and animal health. Off-exchange investors can also gain exposure to the sector through the ETF's feeder funds (Class A: 013471, Class C: 013472).
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