About $25bn was wiped off the market value of Kweichow Moutai, the high-flying Chinese spirit maker, after a state media unit devoted to promoting information on President Xi Jinping accused the company of reaping the benefits of corruption.

Shares in Moutai, the favoured firewater of former Chinese leader Mao Zedong, had risen precipitously since February, becoming the world’s most valuable alcohol company by some distance.

In recent weeks, its rise became a symbol of a market rally that was promoted heavily in state media.

But shares in the company tumbled by the most in almost two years on Thursday after state mouthpiece People’s Daily accused Moutai of benefiting from corruption and bribery.

Bottles of vintage Moutai can fetch thousands of dollars and have long been considered a means of passing bribes to officials without handing over hard cash. The company’s stock was hurt during a crackdown on graft led several years ago by Mr Xi, and some observers have linked the recent rise in its share price with a possible uptick in corruption.

The article, titled “Who foots the bill for spoiled Moutai?”, was published on Wednesday by a division of People’s Daily called Xuexi Xiaozu, which is focused on promoting the president’s ideology. The unit, which translates to “study group”, is a play on words that can also mean “study Xi Jinping group”.

The article quoted Moutai’s former chairman Yuan Renguo as saying in private that sales linked to corruption are “a normal part of business” and that the Central Commission for Discipline Inspection, which led the clampdown on corruption starting in 2012, would not reach far enough to meddle in the company’s business. 

Mr Yuan was removed as chairman in May 2018 and arrested on corruption charges about a year later. A number of Moutai officials have been detained over the past year, the most recent being two senior executives who were investigated for “suspected serious violations of discipline and law” last week, according to state media.

Moutai shares closed down 7.9 per cent on Thursday, wiping about Rmb173bn ($24.7bn) off the company’s market capitalisation.

The company could not be reached for comment.

The distiller remains the largest listed company in China and its stock price is up 36 per cent since the start of the year. Its market cap surpassed that of ICBC, the top Chinese bank, in June. Even after Thursday’s tumble, its $290bn equity value is about $60bn more than the combined total of AB InBev, Diageo and Heineken.

Any sign of state support or criticism of a listed company in China can often send stocks spiralling.

The People’s Daily story comes after several weeks of state cheerleading for higher stocks. But over the past week the market exuberance has dimmed. The CSI 300 benchmark of large-caps in Shanghai and Shenzhen is down by about 7 per cent since Monday, marking its swiftest drop since the sharp global sell-off in March.

Additional reporting by Tom Hale in Hong Kong

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