The sentiment in the A-share market has obviously warmed up, with the consumer sector experiencing a sudden surge on Friday. The Dairy Product sector rose by 10.98%, the Three-child Policy by 8.6%, alcohol by 5.46%, and Kweichow Moutai surged nearly 6% to break the 1600 yuan mark, seen by the market as a strong signal of recovery in the consumer sector.
Driven by the soaring individual consumer stocks, the Huaan CSI SWS Food & Beverage index ETF, Huabao Food ETF, CMB Food & Beverage ETF, Huaxia Food & Beverage ETF, Yinhua Food ETF, and Tianhong Dining ETF Fund increased by 6.60%, 5.45%, 5.39%, 5.09%, 5.08%, and 5.02%, respectively.
After Friday's surge, the returns of the Food & Beverage ETF, Dining ETF, and Penghua CSI Alcoholic Drink ETF have just turned positive for the year.
Hong Kong's technology sector has led the gains this year. Year-to-date, the Hang Seng TECH Index ETF has risen by 40%, while other ETFs tracking Hong Kong's Technology and Internet, including the Hong Kong Technology ETF and the Hang Seng Consumer ETF, have all exceeded a 30% increase.
After DeepSeek gained attention, foreign investors' sentiment towards China's Technology stocks has turned optimistic since February, and the recent momentum seems to be spreading to other sectors, with continued rising interest in consumer stocks.
Goldman Sachs recently found in its research in the European market that offshore investors have expectations for the sustainability of China’s consumption recovery, and some emerging market Funds that are underweight in the Chinese market have begun Shareholding in Chinese consumer stocks.
Recently, a Goldman Sachs survey was leaked online: some foreign capital Funds have turned optimistic about Chinese Stocks and have begun Shareholding in Chinese consumer stocks.
The leaked survey contains significant information, specifically in several aspects:
1. Goldman Sachs stated that European emerging market Funds have begun to further reverse their attitude towards Chinese Stocks, especially some Funds that are underweight in the Chinese market, seeking to gradually increase Shareholding in Chinese consumer stocks.
Goldman Sachs data shows that since January 2025, bulls have been increasing positions in certain Hong Kong stocks in consumer staples.
2. Goldman Sachs' research found that investors generally tend to believe that China's economy and consumption will gradually recover and expect more substantial policies.
In the past few months, the consumer confidence index in China has shown a stabilization trend, and housing prices have also rebounded, but investors are still closely monitoring the strength of future demand recovery.
Goldman Sachs pointed out that the consumer confidence index slightly improved in January, which is a Bullish Signal for consumption recovery, but the strength still needs to be observed, as investors focus on substantive improvements in demand.
Goldman Sachs believes that the sentiment of recovery in China’s Consumer sector has stabilized, and the earnings cycle may welcome a revaluation.
Goldman Sachs found that thanks to cost reduction and efficiency improvement by companies, signs of profit recovery have emerged in some niche industries. In addition, more cautious capital expenditures from 2024 to 2026 will benefit the improvement of supply and demand in the industry, favorable competition landscape, and drive the profit rebound.
Goldman Sachs believes that after a round of value reassessment for Chinese Technology stocks, the Consumer sector remains 'underperforming', and funds may exhibit rotation.
Regarding the current market, Zheshang pointed out that the market fluctuated upward this week, with major broad-based indices showing a mixed trend. Large Consumer and Large Financial sectors generally rose, while the TMT sector's momentum slowed down. The market situation has clearly shown diffusion driven by policy, gradually shifting from the earlier 'Chinese Technology Revaluation' to 'Chinese Asset Revaluation'. Looking forward, it is expected that the weighted indices will continue to fluctuate upward, leading the overall market upward, with a target aimed at the upper edge of the previous Large Cap Range (where the two peaks of the SSE Composite Index were located on November 8 and December 10 of last year). The Growth Index will likely undergo a 'strong consolidation' under the care of the weights. In terms of configuration, based on the judgment that 'weighted indices break through to lead the market forward, and the Growth Index consolidates under protection', it is recommended that investors continue to adjust their portfolio structure, following the 'buy low sell high' principle, shifting holdings in previously overstretched Technology sectors to the relatively underperforming Large Financial and Large Consumer sectors this year. In addition, due to the weighted indices exceeding expectations, it is difficult for the market to offer a comfortable 'pullback entry point', so it is suggested that investors select symbols from the Large Financial and Large Consumer sectors that have relatively lagging performance this year and look for opportunities to increase allocation during rapid index consolidation.
