2026 Consumer Subsidies Support Markets
5 Min. Read Time
Key News
Asian equities were mixed but mostly higher overnight, as the Philippines and Mainland China's STAR Market outperformed, while Australia and Malaysia underperformed.
China’s stock markets rallied overnight, as both Mainland and Hong Kong benchmarks climbed to multi‑month highs on broad gains, led by financials. There was a slight value bias overnight as Materials and Energy firms also outperformed. It will be interesting to see how changes in Venezuela will impact China's energy prices. The global price of oil was already declining in 2025 and could go lower if US firm are able to tap Venezuela's reserves.
Semiconductor names underperformed overall after stellar performance yesterday, though Shanghai's STAR Market technology innovation board outperformed, led by biotech and semiconductors. AI chipmaker Biren's IPO fell -6.6%.
Optimism around consumer support measures also supported markets broadly overnight, though consumer names themselves underperformed for some reason. China has officially released the 2026 National Subsidy Program, which includes the first batch of RMB 62.5 billion to support the trade-in policy for consumer goods. Smart products were added to the list of categories eligible for subsidies. Meanwhile, the maximum subsidy per appliance has been lowered from RMB 2,000 to RMB 1,500. For new car purchases, subsidies will be 12% or 10% of the car price, with the maximum subsidy continuing the 2025 standard (RMB 20,000 or RMB 15,000).
It was another net buy day from Mainland investors via Southbound Stock Connect, to the tune of $368 million. Top buys were insurance firms, but Alibaba also saw significant interest.
China's currency's appreciation in 2025 was unexpected due to tariffs. The currency slid initially after Trump announced sweeping tariffs, but ended the year significantly higher. Currency markets are no longer pricing in depreciation to offset tariffs, which is a positive sign that trade tensions are widely expected to continue easing.
We have been researching heavily to help advise our investors on what is going to happen in 2026. Below are some potential tailwinds that we have for 2026:
- The 15th Five-Year Plan’s emphasis on domestic consumption and technology self-reliance is simply too big to ignore.
- Raising domestic consumption addresses trade imbalance concerns from both the United States and the European Union.
- An increase in domestic consumption could improve the fundamentals of E-Commerce companies and end the heightened competition for the same high-income, urban wallets that has weighed on margins.
- President Trump’s April 2026 trip to China is an opportunity to broaden the US-China trade truce, which would alter the geopolitical and media narrative.
- Anti-involution could be widely implemented beyond solar, which could help trigger inflation and improve corporate profit margins broadly.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.4% |
| Hang Seng Tech | HSTECH Index | 1.5% |
| Hong Kong Turnover | HKTurn Index | 2.9% |
| Hong Kong Short Sale Turnover | HKSST Index | -23.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 14.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 367.63 |
| China (Shanghai) | SHCOMP Index | 1.5% |
| China (Shenzhen) | SZCOMP Index | 1.4% |
| China (STAR Board) | Star50 Index | 1.8% |
| Mainland Turnover | .chturn Index | 10.3% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.1% |
| Japan | NKY Index | 1.3% |
| India | SENSEX Index | -0.4% |
| Indonesia | JCI Index | 0.8% |
| Malaysia | FBMKLCI Index | -0.5% |
| Pakistan | KSE100 Index | 1.6% |
| Philippines | PCOMP Index | 2.5% |
| South Korea | KOSPI Index | 1.5% |
| Taiwan | TWSE Index | 1.6% |
| Thailand | SET Index | -0.4% |
| Singapore | STI Index | 1.3% |
| Australia | AS51 Index | -0.5% |
| Vietnam | VNINDEX Index | 1.6% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 117 | 164 |
| Advancing Stocks | 65 (Hang Seng) | 247 (CSI 300) |
| Declining Stocks | 19 (Hang Seng) | 48 (CSI 300) |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Materials, Real Estate, Consumer Staples | Materials, Communication Services, Financials |
| Bottom Sectors | Information Technology, Utilities, Consumer Discretionary | Consumer Staples, Utilities, Indutrials |
| Top Subsectors | Non-Ferrous Metals, Chemical Industry, Coal | Petrochemicals, Precious Metals, Securities Industry |
| Bottom Subsectors | Semconductors, Technology Hardware, Electrical Equipment | Forest Industry, Motorcycles, Household Products |
| Southbound Connect Buys | Ping An, Alibaba, China Life Insurance | N/A |
| Southbound Connect Sells | China Mobile, Tencent, Hua Homng Semiconductor | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | 1.16 |
| Communication Services | 9 | 1.42 |
| Consumer Discretionary | 28 | 0.34 |
| Consumer Staples | 13 | 1.68 |
| Energy | 7 | 1.67 |
| Financials | 23 | 1.81 |
| Health Care | 13 | 0.94 |
| Industrials | 20 | 0.99 |
| Information Technology | 10 | -0.57 |
| Materials | 10 | 4.42 |
| Real Estate | 6 | 2.76 |
| Utilities | 12 | 0.14 |
| Mainland China Listed | 404 | 1.54 |
| Communication Services | 6 | 2.12 |
| Consumer Discretionary | 31 | 1.43 |
| Consumer Staples | 24 | 0.56 |
| Energy | 13 | 1.94 |
| Financials | 64 | 2.1 |
| Health Care | 31 | 0.8 |
| Industrials | 64 | 0.74 |
| Information Technology | 91 | 0.95 |
| Materials | 58 | 3.96 |
| Real Estate | 6 | 0.93 |
| Utilities | 16 | 0.61 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 1.3 |
| Alibaba HK | 9988 HK Equity | -1.3 |
| JD.com HK | 9618 HK Equity | 1.6 |
| NetEase HK | 9999 HK Equity | 3 |
| Yum China HK | 9987 HK Equity | 0.7 |
| Baozun HK | 9991 HK Equity | 3.8 |
| Baidu HK | 9888 HK Equity | 1.7 |
| Autohome HK | 2518 HK Equity | -0.4 |
| Bilibili HK | 9626 HK Equity | 2.2 |
| Trip.com HK | 9961 HK Equity | 3.9 |
| EDU HK | 9901 HK Equity | 2.1 |
| Xpeng HK | 9868 HK Equity | 4.1 |
| Weibo HK | 9898 HK Equity | 2.3 |
| Li Auto HK | 2015 HK Equity | 2.4 |
| Nio Auto HK | 9866 HK Equity | 0.1 |
| Zhihu HK | 2390 HK Equity | 4.3 |
| KE HK | 2423 HK Equity | 3.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.9 |
| Meituan HK | 3690 HK Equity | 0.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | -1.2 |
| TENCENT HOLDINGS LTD | 1.3 |
| ALIBABA GROUP HOLDING LTD | -1.3 |
| CHINA MOBILE LTD-H | -0.1 |
| HUA HONG SEMICONDUCTOR LTD-H | 1.3 |
| XIAOMI CORP-CLASS B | -1.5 |
| HSBC HOLDINGS PLC | 3.1 |
| MEITUAN-CLASS B | 0.7 |
| PING AN INSURANCE GROUP CO-H | 5 |
| YANGTZE OPTICAL FIBRE AND-H | -3.9 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | 5.7 |
| ZHONGJI INNOLIGHT CO LTD-A | -2.9 |
| CHINA SPACESAT CO LTD -A | 7.6 |
| ZHEJIANG SANHUA INTELLIGEN-A | 1 |
| ADDSINO CO LTD -A | 3 |
| EOPTOLINK TECHNOLOGY INC L-A | -2.1 |
| BLUEFOCUS INTELLIGENT COMM-A | -1.2 |
| LEO GROUP CO LTD-A | 6.9 |
| CHINA AEROSPACE TIMES ELEC-A | 10 |
| VICTORY GIANT TECHNOLOGY -A | 1.5 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.99 versus 6.99 yesterday
- CNY per EUR 8.16 versus 8.16 yesterday
- Yield on 10-Year Government Bond 1.86% versus 1.86% yesterday
- Yield on 10-Year China Development Bank Bond 1.95% versus 1.95% yesterday
- Copper Price 1.74%
- Steel Price -0.45%
