From May Travel Boom to Potential Consumption Explosion
Certain consumption could go higher, a lot higher as people buy less real estate
In this post, we talk about:
The May holiday travel rush
What drove the China market recovery on Friday
Three areas of strong consumer spending that are likely to continue
Why China need to restore consumer confidence ASAP
Not buying more real estate may lead to a “consumption explosion”?
Our Hong Kong Reopening Select Index is up 2.8% YTD as of April 28. This compares to a -1.9% return of the MSCI Hong Kong Index and a 0.6% return of the Hang Seng Index. For more information, please contact anson.chau@megatrust.com.hk
Multiple reports indicate a surge in May holiday travel and tourism in China (April 29 to May 3). Even before the break, there were traffic jams on the way out and long lines at the airports and train stations. A record number of 120 million railroad passengers this time, 20% higher than the pre-covid level in 2019 and surpassing the previous Chinese New Year travel rush.
To understand how crazy things can get, here is a video of overcrowded tourist attractions in China from previous May holidays. This year may be more crowded, given the strong pent-up demand following China’s reopening (“revenge travel”).
Driven by positive sentiment on holiday travel, China A-shares recovered on Friday (April 28). The CSI 300 Index was up 1% yesterday, while the SWS Transportation Index gained 1.2%, and the SWS Social Services Index gained 1.7%. The latter two include airlines, railroads, restaurants, hotels and tourist services etc.
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