China tea party crashed by end to investment frenzy
By Simon Rabinovitch
BEIJING (Reuters) - Those nursing losses in their stock portfolios should spare a thought for Chinese investors who piled into the tea market in one of the more frenzied and bizarre speculative bubbles last year.
The price of puer tea, a fermented variety from the country's southwestern Yunnan province, has crashed under the weight of overproduction and a vastly diminished appetite for exotic assets.
Puer tea has shed 85 percent of its value since peaking in May last year, industry watchers said on Tuesday. That is even worse than the Shanghai stock market, which has tumbled nearly 70 percent from a record high scaled 14 months ago.
"People who did not really understand the industry have been hit the hardest," said Yong, the representative of a puer trade website (cnpuerh.com) based in Xishuangbanna, a mountainous region in Yunnan that produces the tea.
Yong, who did not want to give his first name, said many of the tea farms that turned to puer when it was the darling of investors have quit the business.
Connoisseurs of the slightly bitter tea, though, are not necessarily grieving the loss.
"The price is very low, so farmers have stopped managing their crops so intensively. They use less fertilizer, less pesticide," Yong said. "This actually means the quality now is very good."
Back in the heady days of puer investment, people paid astronomical sums for the tea, which is sold in hard-packed bricks and tastes best when aged like fine wine. Continued...