Consumers to spur shares

Shares of companies related to consumption, particularly highquality products and services, will continue to offer investment opportunities this year, analysts said.

Such companies will benefit from China’s consumption upgrade. Chinese consumers are increasingly demanding high -quality goods and services, they said.

With rising disposable income, consumers are more sophisticated now than before, and are willing to spend more on aspirational or lifestyle pursuits like expensive food, branded clothes and accessories, nifty gadgets, topend entertainment and experiential tourism.

So, sales and profits of highend liquor makers, insurers and online retail companies may rise this year, which is likely to boost market sentiment toward their shares.

Consumption is becoming a strong driver of China’s economic growth. This will brighten earnings prospects of consumer goods companies and related service providers, said Zhang Xu, an analyst Ltd.

Stock prices are already reflecting such a trend as investors continue to bet big on consumptionrelated companies.

Indexes that track listed companies in sectors like liquor, food, electronic appliances and insurance were among the best performers in China’s Ashare market over the past six months, according to financial data provider Wind Info.

For instance, Chinese liquor producers and brewers have seen their shares surge in the wake of a rise in their product prices.

Kweichow Moutai Co Ltd, China’s signature highend spirit maker, saw its shares reach a record 782.5 yuan ($120) as of Tuesday, up by more than 130 percent over the past year.

“Consumption is becoming one of the main pillars of China’s economy,” Zhang said, adding that sectors such as online retail, entertainment and manufacturers of premium consumer goods will benefit from the trend.

China’s top policymakers have stated that the country will focus on highquality growth rather than the absolute growth rate number at the annual, tonesetting Central at Shanxi Securities Co Economic Work Conference held in December.

Liang Hong, chief economist at China International Capital Corp, a leading investment firm, expressed similar optimism about China’s domestic demand and growth potential in consumption.

“Consumption growth will likely pick up on the back of rising disposable income growth, especially that of lowerincome households that have higher consumption propensity,” Liang said.

China’s total retail sales of consumer goods reached 29.7 trillion yuan in the first 10 months of last year, up by 10.3 percent yearonyear, according to official data. Consumption expenditure during that period contributed about 64.5 percent of economic growth.

Michael Tong, chief China strategist at Deutsche Bank, recommend investors to focus on investment themes related to environment, advanced manufacturing, premium consumption and reform of Stateowned enterprises.

“Although GDP growth is likely to moderate, the economy should demonstrate resilience and deliver better quality growth,” Tong said in a research note.