In early trading today, the electronic cigarette sector continued its strong performance yesterday. After the Hong Kong stock China Bolton surged by more than 50% yesterday, it rose again by nearly 20% to HK$5.7 in intraday trading today. The stock price hit a new high since March this year: A-share Shaanxi Jinye daily limit for the second consecutive day, Yiwei Lithium Energy, Huabao shares and Jinjia shares followed suit.

On the news, on November 23, the national standard information service public platform showed that the status of the national standard for electronic cigarettes (20171624-Q-456) was changed to being drafted, while the "Determination of Nicotine, Propylene Glycol and Glycerol in Electronic Cigarettes by Gas Chromatography" Legal Standards (20172264-T-45) status is still under approval.

Guoyuan Securities pointed out that the market was worried that my country's new tobacco had the risk of being banned "one size fits all", but from the main content of this national standard meeting, it is inferred that the risk of being banned no longer exists, and industry supervision is expected to be stricter. Enterprises are expected to benefit from the process of industry standardization.

Previously, with the loosening of US regulatory policies, the industry's pessimistic expectations were released. On October 12, the U.S. FDA allowed British American Tobacco’s Vuse Solo series of three products, including one enclosed electronic cigarette device and two tobacco-flavored pods. Huaan Securities analyzed that this move is a milestone in the industry and has reference value for industry supervision offices in other countries. It is expected to enhance the confidence of e-cigarette consumers around the world and benefit the recovery of e-cigarette consumer demand.

Policy risk has always been a major factor affecting the development of the e-cigarette industry. In March of this year, the Ministry of Industry and Information Technology publicly solicited opinions on the revision of the "Regulations on the Implementation of the Tobacco Monopoly Law of the People's Republic of China", and planned to add an article to the Supplementary Provisions as Article 65: "Electronic cigarettes and other new tobacco products refer to the relevant regulations on cigarettes in this Regulation. Regulations are enforced." Affected by the news, the share price of e-cigarette leader Smol International has fallen by more than 60% so far, and the market value has evaporated by about 300 billion Hong Kong dollars.

At present, my country is the main production base of electronic cigarettes in the world, and its output accounts for about 95% of the world's total, of which more than 90% are exported. If the domestic policy pressure can be relaxed, it may help enterprises in the industrial chain to develop new growth points. However, it is worth noting that China's e-cigarette regulatory rules have not been fully implemented, and they will still face the risks of being levied heavier taxes and franchised operations in the future.

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