Recent recovery policies China’s initiatives are beginning to bear fruit, bringing new impetus to e-commerce and the retail. According to UBS, the first signs of economic recovery are visible, particularly marked during the key period of the Golden Week surrounding National Day. This dynamic encourages analysts to revise upwards the growth forecasts of the Chinese economy, forecasting a significant impact on business performance Internet and e-commerce platforms.
Summary of the situation
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While China is implementing recovery policies to improve its economy, their positive impact is starting to be felt in key sectors such as e-commerce and the retail. According to UBS, signs of economic recovery are particularly evident in high-end retail and tourism, providing a glimmer of hope for emerging stabilization. With the growth of the wholesale market and cross-border trade, as well as favorable tax measures, China appears well positioned to strengthen its medium-term economic outlook.
Gradual recovery of e-commerce and retail sector
The economic recovery measures initiated by China are beginning to bear fruit, as evidenced by a significant improvement in the sectors of e-commerce and the retail. According to Kenneth Fong, head of internet research at UBS Investment Bank, signs of economic recovery are becoming visible as stimulus policies take effect. Online platforms benefited from promotional campaigns and activities in shopping centers, especially during the Golden Week around last month’s national holiday. This period of intense sales saw notable success thanks to coupon promotions, thus stimulating consumption.
Impact on the tourism sector and delayed recovery of certain sectors
The sector of tourism, another pillar of the Chinese economy, also recorded progress, with growth estimated at around 6% during this Golden Week. Despite these improvements, other sectors such as advertising and recruitment are still experiencing difficulties, although a recovery is expected with a lag of one to two quarters after the general economic improvement.
Stabilization of internet company profits
Profits of Chinese internet companies appear to be stabilizing, with an average price-to-earnings ratio of around 15%, according to Fong. Forecasts indicate a possible increase in earnings per share of around 16 to 17 percentage points within two to three years. This dynamic suggests a continued increase in sector valuations.
Opportunities in local and cross-border trade
Attractive opportunities are emerging, particularly in the local business and the cross-border trade, where penetration rates still remain relatively low. Major platforms are looking to redefine their supply chains and improve efficiency to increase profit margins, rather than relying on price cuts to boost orders.
Chinese stocks and the economic outlook
Chinese stock markets reacted positively to the new stimulus measures, with a notable rise in the onshore CSI 300 index. However, volatility persists as investors speculate on possible additional fiscal measures. UBS recently adjusted its GDP growth forecast for China this year, revising it upwards from 4.6% to 4.8%.
Particular attention to companies with high potential
Companies with strong earnings potential, including large platforms and content-based internet companies, remain attractive choices for investors. Fong also points out that companies with narrow, or just profitable, profit margins, as well as those with low valuations, are also worth looking at closely for future opportunities.
Impact of Chinese Recovery Policies
| Sector | Effect of Recovery Policies |
| Electronic Commerce | Recovery with opportunities in local shopping and cross-border purchasing |
| Luxury Retail | Success through mall activities and promotions |
| Tourism | 6% growth during Golden Week period |
| Advertisement | Recovery delayed by one or two trimesters |
| Recruitment | Recovery after the global economic restart |
| Internet | Revenue stabilization with stock growth potential |
| Supply chain | Restructuring and improving efficiency |
| Global Economy | GDP forecast increased from 4.6% to 4.8% |
| Chinese Stocks | Continued volatility despite stimulation |
| Financial Market | Positive reaction with an increase in the CSI 300 index of 7.2% |
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Economic stimulus:
- 25 basis point drop in LPR at 1 and 5 years
- CSI 300 index rises by 7.2%
- Resumption of exports thanks to resilient logistics
- 25 basis point drop in LPR at 1 and 5 years
- CSI 300 index rises by 7.2%
- Resumption of exports thanks to resilient logistics
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Impact on e-commerce:
- Opportunities in local shopping and cross-border shopping
- Stabilization of internet company profits
- Average price/earnings ratio of 15%
- Opportunities in local shopping and cross-border shopping
- Stabilization of internet company profits
- Average price/earnings ratio of 15%
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Retail effects:
- High-End Retail Success During Golden Week
- 6% growth in the tourism sector
- High-End Retail Success During Golden Week
- 6% growth in the tourism sector
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Business strategies:
- Supply chain improvement to increase profit margins
- Focus on content-based internet platforms and businesses
- Supply chain improvement to increase profit margins
- Focus on content-based internet platforms and businesses
- 25 basis point drop in LPR at 1 and 5 years
- CSI 300 index rises by 7.2%
- Resumption of exports thanks to resilient logistics
- Opportunities in local shopping and cross-border shopping
- Stabilization of internet company profits
- Average price/earnings ratio of 15%
- High-End Retail Success During Golden Week
- 6% growth in the tourism sector
- Supply chain improvement to increase profit margins
- Focus on content-based internet platforms and businesses