Watch These Spiking China Consumer Stocks Ahead of Key NPC Growth Meeting
China will hold its annual growth-setting congress starting next Wednesday, with consumer stocks gaining ahead of likely efforts to stimulate consumption and confidence.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
China is gearing up to hold the annual meeting of its congress next week, a chinwag where the government announces its growth target for the year. And how the tectonic plates of geopolitics have shifted for the positive since this government body last met.
The National People’s Congress will start what’s roughly a two-week agenda-setting session on March 5. While the Beijing bigwigs are planning in private on how to handle U.S.-China relations under a second term of U.S. President Donald Trump, the mood will be a little more upbeat than last year, even if China is likely to maintain a target of “around 5.0%” economic growth for the third straight year.
The optimism can be seen in the way that China’s stock markets have rallied since last September. The brief stimulus-inspired runup last fall has led into turbocharged gains for China tech this year, as well as for the kinds of higher-quality Chinese multinationals that are listed in Hong Kong, where international investors can easily access the shares.
Hong Kong stocks are continuing their strong run, as the city delivers a budget that didn’t deliver much, to be honest. The benchmark Hang Seng index hit a three-year high during the day Wednesday, and finished up 3.3% at the close.
I’ve also recommended following the Hang Seng China Enterprises Index, which rose 3.5% on Wednesday, comprised of China-based businesses that are listed in Hong Kong.
And the biggest gains (and falls) typically occur with the Hang Seng Tech Index, which ended Wednesday on a 4.5% advance.
U.S. investors can take advantage of the gains in the Hang Seng Tech Index with the KraneShares Hang Seng Tech Index exchange-traded fund KTEC. That is up 29.1% as of Tuesday’s close on Wall Street, not yet factoring in Wednesday’s Asia gains. I’ve taken a small position in that ETF to put my money where my mouth is.
Any investment into China tech is going to be even more volatile than an investment into U.S. Big Tech. But given the woes that the Magnificent Seven currently face, with only Meta Platforms META and Apple AAPL currently in the black year-to-date, it makes sense to take a little U.S. tech exposure and shift it to a momentum-driven market in the midst of a bull run.
Wednesday’s strong Hong Kong gains take the Hang Seng to a 21.2% return so far this year, with the China Enterprises normally a little better off, up 24.0%, and the Hang Seng Tech the sure winner, up 33.3% as of Wednesday’s close.
All those gains of course look better if you take their recent low, on January 13, one week before Trump took office. Since then, there’s been a relief rally that tariffs on Chinese goods, at an extra 10%, have been nowhere near as bad as imagined.
It’s the China consumer plays that are holding sway Wednesday. Grocery-app operator Meituan MPNGY (HK:3690) popped the most on both the China enterprises and the tech indexes —it’s a component in both — ending the day up 9.8%.
But property developer Longfor Group LGFRY (HK:0960) actually led the Hang Seng as a whole, up 10.7%, although it isn’t in either of the subindexes. China property plays have generally devolved into penny stocks, given the years-long downturn in property prices and owner confidence, so play them at your peril. Longfor did, however, just declare a dividend, meaning it’s yielding 4.6% but most importantly is actually profitable, unlike many of its rivals.
Longfor’s peers China Overseas Land & Investment CAOVY (HK:0688) and China Resources Land CRBJY (HK:1109), which both have an element of state ownership that gives a tacit stamp of support, advanced Wednesday.
Other notable consumer-play gainers Wednesday come in the decidedly non-tech form of Budweiser Brewing Co. APAC BDWBY (HK:1876), which saw its biggest gain in four years as, in declaring disappointing earnings, it announced management changes including naming Yanjun Cheng as the new CEO. Like Longfor, the Asia arm of Anheuser-Busch InBev BUD did declare an attractive dividend.
Embattled water brand Nongfu Spring NOGFY (HK:9633) will likely see its decorative bottles adorn tables at next week’s meeting. Its shares gained 7.4% Wednesday. It is led by China’s richest man, Zhong Shanshan, who tops the Forbes China rich list with a US$50.8 billion fortune. But the brand has been suffering through fierce price cuts as well as a bizarre social-media scandal alleging the company’s bottles featured Japanese nationalist imagery. The Hong Kong Consumer Council also found that the bottled water came close to a European threshold for bromate, which is a suspected carcinogen.
We saw a great showing for e-commerce operator JD.com JD (HK:9618) yet again, with the Alibaba Group Holding BABA (HK:9988) rival up 8.5%. Alibaba added 4.8%.
The smartphone maker Xiaomi XIACY (HK:1810) added 5.8%, taking its shares to a record high. It is reaping the rewards of introducing new phone models. Founder Lei Jun also set an ambitious target to sell 10,000 units of its electric vehicle, the upscale SU7 Ultra, something he says his team are “90% certain of hitting.”
It looks a little like a Tesla crossed with a Porsche if you ask me. But there’s no doubt Tesla is losing any cachet it held as an upscale import. A day after Tesla TSLA shares slumped 8% on Wall Street, China EV makers added 8.3% in the form of XPeng XPEV (HK:9868) and 7.7% for Li Auto LI (HK:2015). Market-share leader BYD BYDDY (HK:1211) was relatively restrained with its 0.7% gain Wednesday but is nevertheless up 50.1% in 2025. I should note that I own small positions in XPeng, Li Auto and BYD.
So the market mood heading into the National People’s Congress is ebullient, even if Chinese President Xi Jinping warned his cabinet to “calmly respond to challenges brought about by changes in the domestic and international situation,” according to state news agency Xinhua.
The NPC brings together some 3,000 delegates each spring, with Premier Li Qiang due to open the session with his work report, where the premier normally announces the growth target. With growth expected to be “around 5.0%,” China watchers will also be listening for any change in the inflation goalpost, which may be set below 3% for the first time in two decades. That would indicate the Chinese Communist Party are aware of the threat of deflation, and may act to stave it off.
It’s likely that boosting consumer confidence and consumer spending will be a key part of the conclusions. There’s scope for an existing, already expanded trade-in program for consumer goods to extend further.
I was on the Money Talk podcast hosted by the former RTHK broadcaster Peter Lewis this morning, chatting over the budget and China’s trade relationship with Trump alongside John Schofield, the managing director of Tempus Investments. It’s a half-hour segment and the Spotify link is here, with the LinkedIn link here, should you care to listen.
While China’s pace of growth has not changed, there’s optimism that relations with the United States could even improve if Trump and Xi work towards an expansion of the “Phase One” trade deal agreed during Trump’s first term. With Xi last week hosting leading Chinese CEOs for a symposium, including Alibaba figurehead Jack Ma, the body language heading into the NPC looks far more positive indeed.
At the time of publication, McMillan was long KTEC, LI and BYD.
