The three major A-share indices collectively declined during the morning session. As of the midday break, the Shanghai Composite Index fell by 0.63% to 3961.62 points, the Shenzhen Component Index dropped by 0.62%, and the ChiNext Index declined by 1.49%. The Beijing Stock Exchange 50 Index rose by 3.43%. The half-day trading volume of the Shanghai, Shenzhen, and Beijing markets reached 1.5792 trillion yuan, an increase of 20 billion yuan compared to the previous day, with over 3,800 stocks in the broader market posting gains.
Food and beverage stocks advanced, with gains seen in wine ETFs, food and beverage ETF funds, Tianti Food and Beverage ETF, food and beverage ETFs, food ETFs, consumer 30 ETFs, among others.
The Food and Beverage ETF tracks a sub-sector index focusing on liquor, dairy products, seasonings, and other segments, with its key weighted stocks encompassing absolute industry leaders such as 'Mao-Wu-Lu-Fen-Yang' (Kweichow Maotai, Wuliangye Yibin, Luzhou Laojiao, Shanxi Xinghuacun Fen Wine, and Yanghe Brewery).
The Consumer 30 ETF tracks the SSE Consumer Index, with key holdings including Yili Group, Kweichow Maotai, and Shanxi Xinghuacun Fen Wine. It also incorporates companies such as Haitian Flavouring and Foods Co., Ltd. (food additives), Angel Yeast (food additives), and Proya Cosmetics (beauty care).
From an institutional portfolio perspective, the proportion of actively managed equity funds invested in food and beverage sectors continued to decline quarter-on-quarter in Q3 2025. While there was further reduction in exposure to liquor stocks, investment in mass-market food products also marginally weakened.
The top-heavy allocation of actively managed equity funds in the food and beverage sector stood at 8.16%, 7.51%, 7.39%, 5.62%, and 4.17% respectively from Q3 2024 to Q3 2025, with a sequential decrease of 1.45 percentage points in Q3 2025. Both liquor and mass-market food products were subject to reduced positions.
In particular, the allocation in liquor decreased by 0.77 percentage points quarter-on-quarter to 3.21% in Q3 2025. Allocations in beer, beverage and dairy products, food processing, snack foods, seasoning and fermentation products, and pre-mixed alcoholic beverages changed quarter-on-quarter by -0.22 percentage points, -0.25 percentage points, -0.06 percentage points, -0.15 percentage points, +0.01 percentage points, and -0.01 percentage points, respectively.
For major consumption-focused funds, the allocation to the food and beverage sector declined by 2.89 percentage points quarter-on-quarter to 28.42% in Q3 2025, with the allocation to liquor decreasing by 1.95 percentage points. Other actively managed funds reduced their allocation to the food and beverage sector by 0.84 percentage points quarter-on-quarter to 2.13%, maintaining an underweight position. Allocation to liquor fell by 0.23 percentage points quarter-on-quarter to 1.31%, reflecting an underweight posture, while mass-market products remained broadly underweight, except for slight overweight positions in snack foods and pre-mixed alcoholic beverages.
There was a significant reduction in the number of food and beverage stocks among the top 20 largest holdings of actively managed funds. As of Q3 2025, only one food and beverage stock, Kweichow Maotai, remained in the top 20 holdings by market value, with both Wuliangye Yibin and Shanxi Xinghuacun Fen Wine dropping out. In Q3 2025, the proportion of actively managed funds holding Kweichow Maotai was 1.34%, a decrease of 0.42 percentage points quarter-on-quarter.
Dongwu Securities believes that the liquor cycle is accelerating to reach its bottom, with liquor companies intensifying their strategic shifts. Priorities are given to advancing financial statement adjustments and channel clearance to maintain stable channel order and strengthen long-term growth foundations. Future earnings recovery will depend on inflationary conditions or a combination of macro demand and operational quality improvements by liquor enterprises. Growth expectations for mass consumer goods are relatively high in the short term, but market confirmation of subsequent growth rates will require observation during peak seasons.
BOC International notes that the food and beverage industry is a typical cyclical industry, with the performance of the consumer sector closely linked to external economic conditions. As fiscal and monetary policies work in tandem, the current weakness in consumption is expected to improve, and sub-sectors within the food and beverage industry are likely to emerge from cyclical lows. China is currently at a critical juncture transitioning from investment-driven growth to consumption-led development. In a deflationary economic environment, shifts in consumer demand patterns are affecting profit models on the production side, giving rise to different business formats and significant differentiation within the industry. The food and beverage sector comprises numerous sub-sectors; viewed through the lens of valuation and their respective phases within the cycle, the industry has been significantly impacted by external policies and cost cycles over the past two years. Sub-sectors such as baijiu and catering supply chains remain in the bottoming-out phase, with valuations near relative lows since 2016. Meanwhile, the snacks and soft drinks segments have benefited from channel transformation and category-related advantages, showing noticeable internal differentiation.
