Finance
Chinese consumer companies signal spending is picking up again
Shoppers line up to shop at a Laopu Gold outlet in Deji Plaza in Nanjing, China, on Feb. 21, 2025.
Fang Dongxu | Feature China | Future Publishing | Getty Images
BEIJING — Chinese companies’ latest earnings reports point to an improvement in consumer spending, though it’s not necessarily back to pre-pandemic levels.
E-commerce giants Alibaba and JD.com both said in the last several weeks that their China retail business saw faster year-on-year revenue growth in the last three months of 2024 than in 2023.
“We think consumption growth is in a period of healthy recovery, but not [yet reaching] the high previously,” Charlie Chen, managing director and head of Asia research at China Renaissance Securities, said Wednesday in Mandarin, translated by CNBC.
For consumer spending to return to pre-pandemic growth, Chinese companies’ revenue growth likely needs to recover by double digits and consumer confidence needs to improve, Chen said. He noted that the recent real estate slump has weighed on consumers’ sense of affluence.
Chinese policymakers have emphasized that boosting consumption is their priority this year. So far, authorities have expanded a trade-in subsidy program to include smartphones, on top of home appliances and electric cars. In September, Beijing also signaled a shift in real estate policy by calling for a halt in the market decline.
JD.com has benefitted directly from the trade-in program, and reported 15.8% year-on-year growth in sales for electronics and home appliances in the fourth quarter of 2024. However, full-year segment revenue of 4.9% was only the fastest growth since 2021, when sales surged by nearly 23%.
The government has introduced consumption-stimulating policies since the second half of last year, and they have “driven a steady recovery in consumer confidence,” Sandy Xu, chief executive officer and executive director of JD.com, said in an earnings call this month, according to a FactSet transcript.
“In short-term we believe there are still challenges on the macro side, but in the long term, we remain very optimistic about consumer sentiment,” she said.
Niche markets stand out
Tencent, which operates mobile payments and social media app WeChat, reported a 3% growth in fintech and businesses services to 56.1 billion yuan ($7.7 billion) in the fourth quarter of 2024, noting that “commercial payment services revenue was broadly stable year-on-year.” That compares with 39% segment growth in the fourth quarter of 2019, which Tencent had attributed to “greater revenue contributions from commercial payment.”
Certain companies have found niche areas where Chinese consumers are spending, however.
In late February, Beijing-based Laopu Gold, which makes and sells gold jewelry with Chinese designs, forecast that its net profit last year surged by at least 236% in 2024 to 1.4 billion yuan. The company is set to release full results for 2024 on Tuesday.
Toy company Pop Mart also propelled ahead, reporting on Wednesday that revenue in mainland China more than doubled last year to 2.64 billion yuan.
Niu Technologies reported that e-scooter sales in China surged by more than 80% year on year in the fourth quarter of 2024 to 646.2 million yuan. Full-year segment sales rose by 27.5%. The company attributed growth to its focus on premium models and store expansion.
In contrast, Niu had said the relatively slow recovery in China’s economic growth in 2023 had resulted in a decline in sales that year.
China’s official economic data for the start of the year showed modest improvement in growth.
Retail sales growth of 4% year over year in January and February was the highest increase in the past 12 months on a seasonally adjusted basis, Chen said. Since that rise was on a high base of 5.5% growth in the first two months of 2024, he expects retail sales growth this year will be higher than 4%.
Retail sales rose by a muted 3.5% in 2024. For 2015 to 2019, retail sales had grown by an average of 9.7% each year.
Chen said he expects government policy to support more consumer discretionary or services spending since the potential for recovery is greater there than in daily necessities.
Chinese travel booking site Trip.com said in late February its net revenue for 2024 rose by 20% to 53.3 billion yuan. That was faster than a 15% increase in 2019 to 35.7 billion yuan in net revenue.
While the company did not detail its views on the domestic market, it emphasized that international travel had recovered to more than 120% of 2019 levels. CEO Jane Sun also highlighted in an earnings call that the “silver generation,” or travelers over the age of 50, is a target demographic as the market segment will likely exceed 1 trillion yuan in value in coming years.
Intense competition
China, the world’s second-largest consumer market, remains intensely competitive especially as consumer demand has been soft. Electric car companies have slashed prices, while retailers have struggled to compete with heavy online discounts.
Home accessories retail chain Miniso reported its mainland China revenue grew by 10.9% last year to 1.28 billion yuan, although growth moderated slightly in the December quarter at 6.5%. The company does not plan to accelerate its pace of store openings, and said online sales in China are increasingly driving growth.
Major beverage chains in China from milk tea to coffee also saw lower same-store sales in the latter part of 2024.
Overall industry slowdown and competitors launching low-priced products contributed to a 0.7% drop in same-store sales in the first nine months of 2024, bubble tea chain Guming said in its Hong Kong initial public offering prospectus released Feb. 4.
In the fourth quarter of 2024, average monthly sales per Chagee milk tea store in China fell by 20.6% from a year ago, after modest growth in the prior quarter, according to CNBC calculations of figures disclosed this week in a prospectus for a U.S. IPO. Overseas sales surged by 29.2% year on year in the fourth quarter.
Chinese bubble tea chain Mixue said average sales per store fell to 1.08 million yuan in the first three months of 2024, down from 1.13 million yuan a year earlier, according to the latest figures available.
Even upstart Chinese coffee chain Luckin saw a decline of 3.4% in same-store sales for self-operated stores in the quarter ended Dec. 31 from the year-ago period. Starbucks marked a 6% decline in comparable store sales during that time.
— CNBC’s Ying Shan Lee contributed to this report.
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For the generation that should be in its “peak savings years,” the prospect of retiring on time has shifted from a plan to a prayer.
A newly released Employee Financial Wellness Survey by PwC found that nearly 50% of Gen X employees are pushing back their retirement dates, citing stagnant wages, rising everyday costs, and a lack of liquid savings.
Additionally, only 38% of Gen Xers believe they can retire when they originally planned, and more than half of this demographic expect to withdraw funds from their retirement accounts early to cover short-term costs.
“For employers, this isn’t a future problem. Financial anxiety during peak career years can affect focus and engagement,” PwC researchers write. “If the risks are clear, the question is why more employees aren’t taking action. It’s not a lack of desire. Most employees want stability, confidence and to feel in control. But many don’t feel equipped to get there.”
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The primary driver of this retirement delay is the inability to save as inflation eats away at monthly expenses, the report notes. Twenty-five percent of the total workforce is living without a buffer, and nearly half cannot meet basic household expenses.
Nearly half of Gen X workers are delaying retirement, PwC reports. (Getty Images)
“[Forty-nine percent] say their compensation isn’t keeping up with costs. As expenses rise faster than income, day-to-day trade-offs are becoming routine. Employees aren’t just feeling squeezed. They’re making difficult financial decisions to stay afloat,” the PwC report continues..
As a result, when Gen Xers cannot afford to leave their current jobs, the entire corporate ladder stalls, creating business risks, with companies facing higher costs as older talent remains on payroll longer than expected.
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“When employees dip into retirement funds early or delay retirement altogether, it affects more than personal finances and retirement plan leakage,” the report says. “It may also influence workforce planning, healthcare costs, succession timing and overall organizational stability.”
The findings also show that a significant portion – 41% – of the workforce feel they were never given the tools to manage a crisis of this magnitude, leading to a sense of being “overwhelmed” by financial choices.
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PwC provided a call to action for employees and their employers, encouraging them to reduce the stigma around financial education, foster trust through human coaches, emphasize skill building and focus on day-to-day finances before long-term goals.
“Employees define financial wellness simply: less stress, fewer surprises and the freedom to make financial choices with confidence. For employers, that’s the opportunity.”
Cybersecurity and enterprise software stocks have been market dogs in 2026, with fears that AI will wipe out a wide range of companies in the enterprise space dominating the narrative. But they snapped a brutal losing streak this past week, joining in the broader market rally that saw all losses from the U.S.-Iran war regained by the Dow Jones Industrial Average and S&P 500.
Cybersecurity has been “a victim of some of the AI-related headlines,” Christian Magoon, Amplify ETFs CEO, said on this week’s “ETF Edge.”
It wasn’t just niche cybersecurity names. Take Microsoft, for example, which was recently down close to 20% for the year. Its shares surged last week by 13%.
A big driver of the pummeling in software stocks was a rotation within tech by investors to AI infrastructure and semiconductors and some other names in large-cap tech, Magoon said, and since cybersecurity stocks and ETFs are heavily weighted towards software companies, they were left behind even as those businesses continue to grow on a fundamental basis.
But Wall Street now has become more bullish with the stocks at lower levels. Brent Thill, Jefferies tech analyst, said last week that the worst may be over for software stocks. “I think that this concept that software is dead, and then Anthropic and OpenAI are going to kill the entire industry, is just over-exaggerated,” he said on CNBC’s “Money Movers” on Wednesday.
“Big Short” investor Michael Burry wrote in a Substack post on Wednesday that he is becoming bullish about software stocks after the recent selloff. “Software stocks remain interesting because of accelerated extreme declines last week arising from a reflexive positive feedback loop between falling software stocks and changes in the market for their bank debt,” he wrote.
The Global X Cybersecurity ETF (BUG), is down about 12% since the beginning of the year, with top holdings including Palo Alto Networks, Fortinet, Akamai Technologies and CrowdStrike. But BUG was up 12% last week. The First Trust NASDAQ Cybersecurity ETF (CIBR) is down 6% for the year, but up 9% in the past week.
Piper Sandler analyst Rob Owens reiterated an “overweight” rating on Palo Alto Networks which helped the stock pop 7% — it is now down roughly 6% on the year. Its peers saw similar moves, including CrowdStrike.
Performance of Global X cybersecurity ETF versus S&P 500 over past one-year period.
Magoon said expectations may have become too high in cybersecurity, and with a crowding effect among investors, solid results were not enough to to push stocks higher. But the down-and-then-back-up 2026 for the sector is also a reminder that when stocks fall sharply in a short period of time, opportunity may knock.
“Once you’re down over 10% in some of these subsectors, you start to see the contrarians start to say, ‘well, maybe I’ll take a look at this,'” Magoon said.
He said AI does add both opportunity and uncertainty to the cybersecurity equation, increasing demand but also introducing new competition. But he added, “I think the dip is good to buy in an AI-driven world,” specifically because the risks to companies may lead to more M&A in cyber names that benefits the stocks.
For now, investors may look for opportunity on the margins rather than rush back into beaten-up tech names. “I think investors are still going to remain underweight software,” Thill said.
But Magoon advises investors to at least take the reminder to keep an eye on niches in the market during pronounced downturns. “The best-performing are often the least bought and do the best over the next 12 months versus late-in-the-game piling on,” he said.
While that may have been a mindset that worked against the last investors into cybersecurity and enterprise software in mid-2025 when the negative sentiment started building, at least for now, it’s started working for the stocks in the sector again.
Meanwhile, this year’s biggest winner is also a good example of what can be an extended trade in either a bullish or bearish direction. Last year, institutional ownership of energy was at multi-year lows, Magoon said, referencing Bank of America data. “Reverse sentiment can be a great indicator,” he said.
But he cautioned that any selective buying of stocks that have dipped does have to contend with the risk that there is a potentially bigger drawdown in the market yet to come in 2026. That is because midterm election years historically have been marked by large drawdowns. “If you think it is bad right now, it could get a lot worse,” Magoon said. But he added that there’s a silver-lining in that data, too, for the patient investor. The market has posted very strong 12-month returns after midterm election drawdowns end. So, for investors with a longer-term time horizon and no need for short-term liquidity, Magoon said, “stick in there.”
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New innovation in the exchange-traded fund industry could come at a cost to investors during extreme conditions.
According to MFS Investment Management’s Jamie Harrison, ETFs involved in increasingly complex derivatives and less transparent markets may be in uncharted territory when it comes to violent downturns.
“Those would be something that you’d want to keep an eye on as volatility ramps up,” the firm’s head of ETF capital markets told CNBC’s “ETF Edge” this week. “As innovation continues to increase at a rapid pace within the ETF wrapper, [it’s] definitely something that we advise our clients to be really front-footed about… Lack of transparency could absolutely be an issue if we’re going to start seeing some deep sell-offs.”
His firm has been around since 1924 and is known for inventing the open-end mutual fund. Last year, ETF.com named MFS Investment Management as the best new ETF issuer.
“It’s important to do due diligence on the portfolio,” he said. “Having a firm that has deep partnerships, deep bench of subject matter experts that plays with the A-team in terms of the Street and liquidity providers available [are] super important.”
Liquidity as the real issue?
Harrison suggested the real issue is liquidity, particularly during a steep sell-off.
“We’ve all seen the news and the headlines around potential private credit ETFs. That picture becomes much more murky,” he added. “It’s up to advisors, to investors [and] to clients to really dig in and look under the hood and engage with their issuers.”
He noted investors will have to ask some tough questions.
“What does this look like in a 20% drawdown? How does this liquidity facility work? Am I going to be able to get in? Am I going to be able to get out? And if I’m able to get out, am I able to get out at a price that’s tight to NAV [net asset value], and what’s the infrastructure at your shop in terms of managing that consideration for me,” said Harrison.
Amplify ETFs’ Christian Magoon is also concerned about these newer ETF strategies could weather a monster drawdown. He listed private credit as a red flag.
“If your ETF owns private credit, I think it’s worth taking a look at, kind of what the standards are around liquidity and how that ETF is trading, because that should be a bit of a mismatch between the trading pace of ETFs and the underlying asset,” the firm’s CEO said in the same interview.
Magoon also highlighted potential issues surrounding equity-linked notes. The notes provide fixed income security while offering potentially higher returns linked to stocks or equity indexes.
“Those could potentially be in stress due to redemptions and the underlying credit risk. That’s another kind of unique derivative,” Magoon said. “I would very closely look at any ETF that has equity-linked notes should we get into a major drawdown or there be a contagion in private credit or something related to the banking system.”
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