Article/Chen Jinxing, columnist of Sina Hong Kong (WeChat official account xlgg sina)
China is undergoing economic restructuring, and the size of the middle class has reached 300 million people, which will only grow steadily in the future. The middle class has high requirements for product quality and services. Consumption upgrading is an inevitable trend, which will in turn promote the formation of the economy and high-value industrial chain. This will not change due to the temporary economic slowdown or weakening consumption.
At present, the mainland economy is at risk of slowing down, and the external environment is becoming more and more complex. In order to stabilize the economy, in addition to injecting liquidity into the market and increasing infrastructure efforts, how to stimulate consumption desire is obviously the key. The central government has stabilized the economy in an all-round way, including monetary and fiscal policies, and has also been more active in guiding bank loans to promising and well managed SMEs, so as to eliminate the misunderstanding of the country's entry and exit, and further prevent systemic risks and stabilize employment. The objective effect of the policy can strengthen consumer confidence and enhance the strength and toughness of consumption in the mainland.
In the first 10 months of 2018, the total retail sales of social consumer goods reached 30.98 trillion yuan (RMB • the same below), an annual growth of 9.2%, slightly lower than the expected growth of 9.3%. In October alone, the total retail sales of social consumer goods reached 3.55 trillion yuan (RMB • the same below), an annual nominal growth of 8.6%, lower than the expected growth of 9.2%. In the past year, the highest growth rate of this consumption data was 10.3% in September 2017, while the lowest was 8.5% in May 2018, with an average growth rate of about 9.4%. With this year's volatile and complex external situation, and a higher base than ever before, the momentum of consumption growth has been good.
There is no doubt that the sales of cars and mobile phones in the mainland have been sluggish, and the first 10 months have shown a year-on-year decline, which is definitely worth noting. While the mainland property market is sluggish, property prices have risen slowly, and the wealth effect and consumption ability have also been weakened. The prudent future economic prospects will lead to a more conservative consumption attitude, This is the main reason for the slowdown in consumption. However, the situation is not out of control, and there is no sign that the momentum of consumption growth will disappear.
In the past, the online shopping activity of the Double 11 Festival reached 213.5 billion yuan, an increase of 27% year on year. Although the growth momentum has slowed down, it has exceeded expectations. This shows that the consumption activity is still active. Even though the sales of high-end consumer goods are under pressure, the demand for daily necessities is still strong. On the whole, the economic operation in October was generally stable with progress. A series of recent measures to inject liquidity into the market, together with tax deductions and more large-scale tax cuts, are the right way to effectively strengthen consumer confidence.
China is undergoing economic restructuring, and the size of the middle class has reached 300 million people, which will only grow steadily in the future. The middle class has high requirements for product quality and services. Consumption upgrading is an inevitable trend, which will in turn promote the formation of the economy and high-value industrial chain. This will not change due to the temporary economic slowdown or weakening consumption. The driving force of China's consumption is still strong. This year, there are some contrarian shares, many of which are also consumer shares, such as Li Ning (2331. HK), Gaoxin Retail (6808. HK) and Mengniu (2319. HK). As long as they adhere to quality, cherish brands and focus on developing the market, they can eventually run out of the open and upgraded market.
(The author of this article introduces that he graduated from the Department of Economics of the University of Hong Kong, and has 20 years of experience in stock market analysis. He has a deep understanding of the risks and opportunities in the stock market. In addition, he once served as the chief analyst of a local boutique investment bank, specializing in local small and medium-sized stocks. Now he is the research director of King Securities (Hong Kong) Co., Ltd., and comments on Hong Kong stocks on radio, television, newspapers and magazines in Hong Kong from time to time.)
