(Jan 23): Investors are watching for signs that one of China’s biggest spending seasons may jumpstart the country’s consumer stocks after a disappointing start to the year.

Shares of airlines, snack manufacturers, hotel operators and movie companies stand to gain if there’s a spending bump after officials rolled out various measures to stimulate consumption. Traders are eyeing data including air passenger traffic and box-office sales during the Lunar New Year holidays, running from Jan 28 to Feb 4, to gauge demand.

A degree of caution persists despite a concerted effort by authorities to boost spending, as slowing growth, a long-standing property slump and geopolitical risks deter consumers. A gauge of onshore consumer staple shares has fallen almost 6% since the start of the year to underperform the benchmark CSI 300 Index.

While the holiday is likely to boost sales, “the impact may be limited and any market reaction may be short-lived,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co.

Here are sectors and themes to watch:

A new gifting function on Tencent Holdings Ltd’s WeChat may help expand its Mini Shops and boost traffic on the platform, said Ren Yuchen, an investment adviser at Guotai Junan Securities Co. 

“Snacks, beauty products, small appliances, and other items with gift attributes are expected to benefit,” he added.

Key stocks to watch: Weimob Inc, Three Squirrels Inc, Yankershop Food Co.

Online travel agency Trip.com Group Ltd expects decent domestic and outbound traffic during the break, according to a Citigroup Inc note citing comments from the company’s management. Morgan Stanley also noted hotel prebooking prices for the period matched last year’s levels, which bodes well for demand.

Lower fares may hurt airlines, though the amount of inbound and outbound travelers during the holiday could increase, said Chen Xin, head of China leisure and transport research at UBS Securities Co.

Key stocks to watch: Trip.com, H World Group Ltd, BTG Hotels Group Co, Air China Ltd.

Interest in the government’s consumer product trade-in programme remains strong, although consumers’ budgets might be smaller this year, Morgan Stanley analysts including Lillian Lou wrote in a note.

Duty free operators may continue to face pressure from favorable exchange rates abroad. It’s been tough for the sector to reach sales levels last seen in 2021 as shoppers flock to Japan and Australia due to their weaker currencies, UBS’ Chen said.

For baijiu distillers, sales haven’t seen a significant pick-up in demand despite the peak sale season ahead of the holiday, according to Bloomberg Intelligence analyst Ada Li.

Key stocks to watch: Alcohol producers Kweichow Moutai Co, Budweiser Brewing Co Apac, China Resources Beer Holdings Co. Also monitor retailers China Tourism Group Duty Free Corp, Midea Group Co.

While last year’s sluggishness in the movie industry may linger, Citi expects the holiday could mark the sector’s first major catalyst in 2025. A rich pipeline of films and subsidies worth 600 million yuan (US$82 million or RM363.7 million) for ticket purchases may provide support, analyst Vicky Wei wrote in a note.

For casinos, Citi continues to anticipate positive gross gaming revenue growth for the first two months of the year, even though the broker saw signs of a pre-holiday slowdown.

Key stocks to watch: Movie companies Maoyan Entertainment and Wanda Film Holding Co. Casino operators MGM China Holdings Ltd, Wynn Macau Ltd, Sands China Ltd are also in focus.

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