Christine Peng, the head of Greater China consumer sector at UBS, expressed that there is a recovery happening, though it will be gradual. Peng noted that currently, consumption growth is still far below pre-Covid levels. UBS anticipates a 5-6% increase in consumption by the end of 2024 due to low consumer confidence, ruling out the possibility of retail sales growing back to 9% in the short-term. Global Blue data, which HSBC collected for duty-free shopping, revealed that luxury spending in September locally and abroad was around 80% of 2019 levels, an improvement from August's 70-75%.According to Christine Peng, Head of Greater China Consumer Sector at UBS, the multi-year trend in retail sales since the onset of the pandemic suggests that consumer spending is growing at a rate of less than 3% annually. She told CNBC in an interview Tuesday that the current rate of growth is still far below pre-pandemic levels. State media reports from the Ministry of Commerce indicated that retail sales during the Sept. 29 to Oct. 5 holiday period increased 9% from a year ago, though this does not include the final and eighth day of the Golden Week holiday. In contrast, retail sales in 2022 dropped 0.2% compared to 8% growth in 2019.
Peng, from UBS, stated that consumption growth is anticipated to reach 5-6% by the end of 2024. She pointed out that there is no way retail sales can return to their pre-pandemic level because of existing low consumer confidence. The property market downturn, reduced government spending, and worries about future earnings due to government regulation have all played a part in fuelling caution when it comes to spending. The Chinese Golden Week holiday witnessed domestic tourism bounce back to the 2019 level, although international travel has yet to recover to the same extent.
The Oliver Wyman survey of over 3,800 affluent Chinese consumers revealed a more conservative approach due to the economic uncertainty. Domestic travel destinations were more highly favored, with Hainan in particular seeing an increase of 15% in visits during the most recent holiday season compared to pre-pandemic peak year 2021. The tropical province is known for its duty-free shopping and stunning scenery.HSBC's Global Blue data outlined that China's spending on luxury goods had recovered to 2019 levels in the Asia-Pacific region, but was only half of pre-pandemic levels in continental Europe. Conversely, tourists from the U.S. and Middle East are now spending a huge 250% more on luxury goods in Europe than before the pandemic.China's 'Golden Week' is here, and with it, some exciting destinations for spending. Three hotspots include Shanghai, Hangzhou, and Beijing. Investors seeking to benefit from the Chinese market could consider a stock with 95% upside: China Evergrande Group (3333.HK). While the company faces recent struggles amid the economic slowdown, its cutthroat competition with other EV firms has not diminished. As for AI, China is making great strides in that area — discovering applications that could give the nation a competitive edge in terms of monetization.
CNBC Pro has more information on China's 'Golden Week' and its potential spend hotspots. For those interested in investing in the Chinese market, China Evergrande Group (3333.HK) stands out as a stock with 95% upside. Despite the impact of the economic slowdown, the company's competitive spirit remains firm — particularly in the EV market. Additionally, China is at the forefront of AI development, with applications that could possibly lead to monetization opportunities.
The highly anticipated Golden Week is here in China, drawing tourists to three of the hottest destinations. Meanwhile, competition remains fierce amongst electric vehicle companies as they battle to become the top contender. Artificial intelligence applications are also being tapped into, providing opportunities for monetization. An insightful stock has been identified with the potential for a 95% rise in value.
Since early 2020, consumer spending has trailed the growth of the Chinese economy as a whole, as restrictions aimed at combating Covid-19 were only released in late 2022. Despite an initial recovery, this has since slowed due to falling exports and a downturn of the real estate market. Nevertheless, various elements of the large economy have begun to show signs of growth. One example is the restaurant industry, with certain chains boasting same-store sales that are 90% of those seen in 2019, "a pretty meaningful acceleration" compared to their summer figures of 70%-80%.
Peng remarked that shops selling toys and groceries had achieved a recovery to 90% of their 2019 sales per store, while sportswear brands had experienced a rise in sales of 20-30% compared to that of the holiday season last year. He continued that the sales of appliances and furniture were not as strong, just like those of luxury items like baijiu. "Consumers are disbursing money again, though the sections that are associated with business costs have yet to get back to their levels prior to the coronavirus period." China is preparing to release figures of their retail sales in September, as well as their 3rd quarter GDP, on the 18th of October.
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