Consumer

The consumption outlook remains solid thanks to households’ sizable excess savings, incomes that will be boosted by a tight labor market and ample capacity to add debt to augment their buying power.

Consumer discretionary shares have led European markets higher this year. While long-term drivers remain positive, can the same be said for the remainder of 2023?

China’s reopening, combined with a slew of pro-consumption policy stimuli, will likely boost household consumption by 10% in nominal terms in 2023 from a year ago. Some of the hardest hit service sectors during the pandemic will experience a strong recovery. Within the A-share market, investors should overweight the consumer discretionary sector versus the Chinese CSI300 benchmark.

Pent-up demand for services is keeping the global economy going, but we still expect recession over the next 12 months. Investors should keep a cautious portfolio stance.