Since the implementation of the new policy on September 24th, the A-share market has given investors quite a few expectations, even after the National Day holiday when the market experienced violent fluctuations. When the stock market heats up, it will to some extent influence people's consumption decisions.

According to the consumption data released by the Ministry of Culture and Tourism, the 2024 National Day has become the strongest in consumer power in recent years. The data from major online platforms can basically confirm this impression - whether it is travel or in-store consumption, the atmosphere of consumption recovery and upgrade is overwhelming.

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On October 8th, at a press conference held by the State Council Information Office, the relevant leaders clearly stated, "The market consumption during the just-ended National Day holiday was vigorous," and it is hard to say that there is no support role played by the rise in the stock market.

After October 9th, the Chinese stock market quickly adjusted and fell, pouring a basin of cold water on the heads of fanatical retail investors. However, under the strong stimulus of policy, the attitude of major institutions and a large number of stock investors towards Chinese assets has not undergone a fundamental shift.

That is to say, people's expectations for the appreciation of Chinese assets have not disappeared. As long as this improvement in future expectations still exists, then the possibility of improving consumer confidence still exists. Whether the logical chain of policy promotion - Chinese asset price repair - stock market and real estate heating up - driving consumption will continue is worth continuous attention.

However, even if there is really a bull market and the consumer market ushers in a new round of prosperity, we have reasons to be vigilant.

01 The Strongest National Day

On October 8th, the Ministry of Culture and Tourism released the "2024 National Day Holiday Culture and Tourism Market Situation," which showed that during the 7-day National Day holiday in 2024, 765 million domestic trips were made nationwide, a year-on-year increase of 5.9% at a comparable scale, and a 10.2% increase compared to the same period in 2019; the total expenditure of domestic tourists was 700.817 billion yuan, a year-on-year increase of 6.3% at a comparable scale, and a 7.9% increase compared to the same period in 2019.

Comparing the consumption data of the National Day holiday in the past ten years, 2024 is undoubtedly the "king" year.

This year's National Day not only has the second-highest number of tourists, but also set a new high for tourism revenue, with per capita consumption increasing to 916 yuan, becoming the "strongest National Day holiday" in history.In the context of previously pessimistic outlooks on consumer sentiment, such a report card is clearly an unexpected pleasant surprise. Even more so, people have begun a certain level of consumption upgrade, rather than just being frugal when traveling. According to booking data from the "Where to Go" platform, after the stock market surge, on September 27th, the number of hotel room nights booked for the National Day holiday period jumped by 19% compared to the previous day, far exceeding the single-day increase during the National Day booking window period.

Data from Tongcheng Travel also shows that in the week leading up to the National Day holiday, the heat of long-haul outbound travel bookings rose rapidly. Airfare prices to long-haul destinations such as Europe, Africa, the Middle East, and North America generally increased, with the booking heat for popular destinations growing by more than 100%. The booking heat for some niche destinations also increased by more than 90%, overall presenting a "quantity and price rise" trend.

On October 7th, Meituan's Golden Week consumption data showed that national in-store consumption in life services grew by 41.2% year-on-year, and the average daily consumption of tourists increased by 69.6% compared to the previous year's holiday.

Ctrip Travel's "2024 National Day Tourism Consumption Report" showed that the average daily order volume of outbound and inbound travel on the Ctrip platform exceeded that of 2019, setting a historical record.

The "2024 National Day Holiday Travel Quick Report" released by Fliggy also showed that the booking volume of domestic high-star hotels, route tours, car rentals, and other tourism products increased significantly year-on-year. Outbound travel continued to grow strongly on the basis of last year's strong rebound, with a year-on-year increase in bookings of more than 50%, among which the scale of international hotel bookings has recovered to about 120% of 2019.

Looking at the entire National Day holiday, high-value consumption seems to have returned overnight. To achieve such good results, the role of the stock market rise is considered to be quite significant. Guo Guangchang, Chairman of Fosun International, directly stated on Weibo, "Our Sanya Atlantis, Shede Baijiu sales have rapidly increased during the holiday. The wealth effect brought by the stock market rise has truly stimulated everyone's consumption demand."

02 Hotspot Directions

Due to the diversity of human living habits, the study of consumer behavior is a grand, complex, and difficult-to-obtain definitive and accurate conclusions systematic project. And guessing consumer hotspots and trends is actually no different from opening a blind box.

If one must find some definitive answers, there may be two aspects with higher certainty.Firstly, there is the "Silver Economy."

According to international standards, a society is considered aged when the proportion of the population aged 65 and above exceeds 7%, deeply aged when it surpasses 14%, and super-aged when it goes beyond 20%. By the end of 2022, China's population aged 65 and above had reached 201 million, accounting for 14.9% of the total population, indicating that the country is already in a deeply aged society and is moving towards a super-aged society.

More critically, the phenomenon of aging is something that can only occur in a period of high material development, as the ancients said, "Seventy is rare in ancient times." In 2023, the average life expectancy of Chinese residents has reached 78.6 years. There has never been such a precedent in Chinese history before, and what we are facing is the first aging phenomenon in history.

This fact implies that the silver economy in China's future offers infinite possibilities, such as the pharmaceutical and health product industries. These sectors have the potential to experience faster growth following an increase in residents' wealth and a boost in consumer confidence.

Additionally, Lin Yuan, the chairman of Lin Yuan Investment, has always publicly stated that he is optimistic about the "business of mouths," referring to the food and beverage industry as well as pharmaceutical and health products. In the era of aging, pharmaceuticals and health products will become rigid demands, especially chronic disease medications and health products that require lifelong use, which will become a significant recurring expenditure.

Of course, as the overall level of knowledge among the aging population improves, the elderly will increasingly enhance their ability to discern more technologically advanced and clinically effective pharmaceutical products by leveraging their knowledge base and learning capabilities. The logic of the health product industry, which has been strongly driven by marketing, will gradually change (especially for products with low technological levels), and the space for selling ordinary health products at high prices and in large quantities through advertising promotion is disappearing.

Secondly, consumption driven by cutting-edge technologies such as AI and the Internet of Things will continue to penetrate.

According to estimates by the iResearch Institute, the scale of China's artificial intelligence industry has reached 213.7 billion yuan in 2023. By 2028, the scale of China's artificial intelligence industry is expected to reach 811 billion yuan.

Following the explosive development since 2019, the innovative technologies brought by AI large models, in addition to their B2B applications, have been able to achieve commercialization in many consumer (C2C) scenarios, such as AI smartphones, AI computers, AI cars, etc., laying the foundation for the future popularization of AI products in the consumer market.

Now, the development path for these more intelligent products mainly involves iterative replacement of non-AI products, offering consumers more cutting-edge and innovative choices. One of the biggest obstacles on this path is the lackluster consumer desire.According to the latest data, consumer demand for changing phones can be described as a sharp decline—global smartphone replacement cycles have been extended to 51 months, meaning that on average, people change their phones once every four years. Similarly, the domestic home appliance market has passed through the rapid expansion phase brought about by the "mass popularization of home appliances," with overall growth slowing down. According to data from AVC Revo, in the first half of this year, the scale of China's home appliance retail market reached 415.6 billion yuan, a year-on-year decrease of 3.6%.

If the prosperity of the stock market can lead to an increase in consumer desire, there is no doubt that the upgrade and renewal of the durable goods industry will accelerate, and the scale of China's AI consumer products will be expanded.

03 Do not bind

The above consumer speculation is just one of the N trends in the future. In fact, as long as people have enough confidence in their future income, they can provide enough "ammunition" to consume. A variety of consumer formats will naturally emerge continuously.

For the middle class, the education brought about by the torture of the bear market and the pressure of survival in the past will teach them some lifelong education, among which the most critical is to learn to distinguish which consumption contains waste and which does not.

For example, high premium consumption driven solely by brands will most likely not return in the future.

In the first half of this year, high-end foreign cosmetics almost collapsed in China. L'Oréal's North Asia sales fell by 1.7% year-on-year, Shiseido's China sales fell by 7% year-on-year, Estée Lauder's net sales in the Asia-Pacific region fell by 6% year-on-year, and Procter & Gamble's organic sales in China fell by 9% year-on-year.

Corresponding to this is the emergence of domestic brands such as Pechoin. In 2023, the sales of domestic brand cosmetics increased by 21.2% year-on-year, with a market share of 50.4%, surpassing foreign cosmetic brands for the first time.

Behind this change is that after a period of consumer downturn, the concept of "substitutes" has taken root in people's hearts. When people find that using substitutes is not too far from the effect of big brands, the law of "the expensive is the good" has already been broken.

As cost-effective products knock many so-called big brands off the pedestal, such beliefs will gradually be strengthened. In the later stage, even if the consumption level returns, some big brand products may also find it difficult to "reclaim lost territory."Another revelation is that consumption should never be linked to the performance of the stock market. The level of consumer willingness depends not only on the amount of money at hand but more on people's expectations of future wealth. During periods of rising housing prices, people, anticipating that real estate will appreciate in value, will have the courage to make large consumption expenditures even if they do not have much money in hand, thanks to the security provided by their property. However, when the real estate market is in a downward trend, even if income increases, it cannot offset the devaluation of wealth caused by falling housing prices, which can make people feel psychologically "poorer" and thus consciously reduce their desire to consume.

The psychological changes that the stock market brings to people are similar to those of the real estate market. However, unlike the real estate market, which has longer cycles and is more predictable, the stock market is ultimately a higher-risk investment game. Even in a bull market, significant rises and falls often go hand in hand, with a heavier gambling nature. If social consumption is forcibly linked to a bull market, it will inevitably lead to future uncertainty and confusion.

Moreover, before and after the "September 24th policy," the actual state of the real economy in the physical industry has not had time to change; what has changed is the sentiment catalyzed by policy. Solving real economic problems with sentiment alone is insufficient; ultimately, it must be grounded in more tangible aspects.

Facts have proven that consumption stimulated by the stock market comes and goes quickly. Even if a bull market is truly encountered, it is very important to moderate one's consumption desires and prepare enough capital for life to ensure certainty, which is a crucial part of life planning.

Forcing consumption to be linked to the performance of the stock market is undesirable, both from a policy perspective and for every ordinary person.