China’s policy shift to boost economic growth next year puts battered consumer stocks in traders’ focus

Companies that cater to the mass market will probably outperform, as the government tries to revive consumer spending, say CICC and Citic Securities

Companies related to the real estate sector will also benefit as the liquidity crunch is eased

2-MIN READ2-MIN

Chinese policymakers are set to release policies to boost consumer spending to put a floor under flagging economic growth. Photo: Bloomberg

Published: 3:16pm, 13 Dec 2021

Traders are once again eyeing stocks lagging the broader market as China makes economic growth its top priority next year by pledging to front-load policy support.

Since the annual central economic work conference concluded on Friday, investors and analysts are looking for clues on themes from the meeting that lays out the policy framework for the following year.

Companies that cater to the mass-market consumers, such as apparel makers, restaurant operators, and appliances and furniture manufacturers, will probably outperform next year, as efforts to put a floor under growth will revive consumer spending, according to China International Capital Corp (CICC).

Citic Securities, the nation’s biggest publicly traded brokerage, has made similar calls and is also bullish on property developers and building-material producers on anticipation that the credit crunch stoked by the “three red lines” in the real-estate market will ease.

“With the policy tone on stabilising growth, the expectations for fundamentals will continue to improve,” said Qin Peijing, an analyst at Citic Securities. “Implementation of these policies and data releases will bolster market confidence.”

Policymakers referred to “stability” 25 times in the official 4,700-word statement, the state-run Xinhua News Agency reported after the conference, underscoring the urgency of shoring up growth after two quarters of faltering momentum.