The 2026 Government Work Report prioritized "building a strong domestic market" as the top annual task, with upgrading and expanding service consumption being a core measure to boost domestic demand. Driven by this, the domestic demand strategy is deepening, household consumption capacity is steadily recovering, and the national economy is accelerating, with first-quarter GDP growing 5% year-on-year. Meanwhile, the consumer market's recovery trend is clear, with first-quarter retail sales up 2.4% year-on-year, a 0.7 percentage point acceleration from the fourth quarter of 2025. Although the pace of consumption recovery lags slightly behind the overall economy, policy transmission and restoration of consumer confidence take time, leaving room for future upside. Overall, the consumer sector may present a medium-to-long-term investment window.
ChinaAMC launched the ChinaAMC Hong Kong Stock Connect Consumer Select Mixed Fund (Class A: 026897; Class C: 026898) on April 22, focusing on leading consumer companies and unique new consumer targets in the Hong Kong market. The fund aims to combine the defensive characteristics of major consumer sectors with the growth opportunities in new consumption, helping investors capture the consumer recovery opportunity. (Data source: Wind)
Leading companies, unique targets, and low valuations highlight the allocation value of Hong Kong consumer stocks. The Hong Kong market hosts numerous leading companies across high-growth sub-sectors like service consumption, new consumption, and internet consumption platforms. These are well-positioned to benefit from policies enhancing service consumption or may achieve faster growth during the consumption rebound.
Specifically, sportswear companies benefit from the integration of "Guochao" trends into young consumers' behavior and preferences, leading to the rapid rise of new domestic brands. Leading internet consumption platforms, after prolonged price wars in food delivery, now trade at highly compressed valuations, while their emerging businesses continue to grow rapidly. The new consumption sector, driven by product innovation from new technologies or business models, represents the fastest-growing segment within the broader consumption space.
Notably, the Hong Kong consumer sector includes many unique companies not listed on the A-share market, complementing the A-share consumer industry. For example, the Hang Seng Consumer Index (HSCGSI.HI) comprises 50 constituents, of which only three are dual-listed on the A-share market as of April 22, 2026, with the rest listed in Hong Kong or the US, according to Wind data.
Valuations in the Hong Kong consumer sector have retreated to historically low levels after recent adjustments, offering a margin of safety. As of April 22, 2026, the Hang Seng Consumer Index's latest price-to-earnings ratio was 16.13 times, lower than nearly 95% of the period over the past five years. Its price-to-book ratio stood at 2.72 times, below nearly 60% of the past five years, highlighting attractive overall valuations.
Southbound capital has seen substantial net inflows since the first quarter of 2026. By April 21, 2026, year-to-date net purchases by southbound funds reached 215 billion yuan, slower than 2025 but significantly higher than the same period in 2024. Meanwhile, foreign capital is flowing actively into Hong Kong stocks. Data from CICC shows that as of the week ending February 25, 2026, passive foreign inflows year-to-date totaled nearly $14 billion, with weekly net inflows hitting a high since the "September 24 market rally" of October 2024, indicating increased overseas institutional investor interest in Chinese assets.
The combined support from domestic and foreign capital strengthens the liquidity foundation of the Hong Kong consumer sector and shifts its pricing dynamics from foreign-led to a joint pricing mechanism. The rising capital endorsement further validates the sector's allocation value. Coupled with the dual drivers of consumption recovery and policy dividends, the medium-to-long-term investment opportunity in the sector becomes increasingly evident.
Focusing on structural opportunities in Hong Kong consumer stocks, the proposed fund manager, Xu Man, has over nine years of securities industry experience, including more than three years in public fund management. Her investment focus is on the consumer sector, particularly emerging consumption. As future consumer demand becomes more segmented, her strategy will balance changes in demand-side dynamics with supply-side innovation, gradually identifying leading players in promising segments.
Ms. Xu Man has been solely managing the ChinaAMC Consumer Select Fund since February 21, 2023. As of December 31, 2025, the fund's cumulative net asset value and one-year NAV growth were 11.21% and 10.34%, respectively (compared to the benchmark's -7.11% and 1.87% over the same periods), demonstrating strong excess return capability. The fund ranked in the top 50% of its Galaxy Securities category over the past one and two years, achieving the top rank in its category for 2024. (Performance data sourced from fund periodic reports, verified by the custodian, as of December 31, 2025; detailed notes available at the end.)
Addressing trends like consumer demand segmentation, channel diversification, and fragmented traffic, Xu Man outlined three investment approaches for the current consumer sector:
First, focus on sub-sectors with low valuations showing signs of inflection. Examples include the breeding sector, where supply-side consolidation is ongoing; the catering industry chain with improving competitive dynamics; and the hotel and catering segment with significant operating leverage advantages.
Second, monitor high-growth segments. After previous market corrections, valuations in new consumption have fallen to low levels, yet rapid growth in this area supports potential independent performance. With strong external demand growth, companies with global competitiveness in overseas markets, increasing international revenue share, and those benefiting from accelerated industrialization in non-US countries, such as home appliances and light industrials, are favorable. Domestically, sectors with high-quality supply, like health and wellness, are also noteworthy.
Lastly, track consumption-stimulating policies. As domestic policies to boost consumption take effect, the allocation value of basic consumption and service consumption sectors deserves attention, with recent improvements already visible in premium and service consumption areas.
ChinaAMC, a comprehensive asset management platform, excels in equity investments. The firm is committed to providing well-suited, strategy-clear active equity products, continuously refining investment strategies, and focusing on forward-looking industry opportunities. Leveraging a full-spectrum research platform and strong strategic capabilities, it has delivered solid investment results. According to Guotai Junan Securities statistics, as of end-December 2025, ChinaAMC ranked 5th out of 13 large fund companies in active equity performance over the past five years. (Data source: ChinaAMC, custodian-verified; product rankings from Galaxy Securities, as of December 31, 2025; detailed notes available at the end.)
Looking ahead, the consumer sector retains its "long runway, thick snow" characteristics. Combined with factors like the rise of new consumption, low Hong Kong valuations, and growing global interest in Chinese assets, the ChinaAMC Hong Kong Stock Connect Consumer Select Mixed Fund (Class A: 026897; Class C: 026898) offers a potential avenue to participate in the consumption recovery.
Risk Disclosure: Data source: iFinD, as of March 13, 2026. Performance data from fund periodic reports, custodian-verified, as of December 31, 2025. Fund benchmark: 65% CSI Domestic Consumption Theme Index Return + 15% CSI Hong Kong Stock Connect Composite Index (CNY) Return + 20% ChinaBond Composite (Total Value) Index Return. Full-year performance (benchmark) since inception (2024-2025): 23.82% (7.53%), 10.34% (1.87%). Ranking data from Galaxy Securities, as of December 31, 2025, category: Consumer Sector Equity-oriented Funds (Class A). Past performance does not predict future results; other funds' performance does not guarantee this fund's results. Fund ratings are not future performance predictions and should not be considered investment advice.
Specific Risks: This fund invests in Hong Kong-listed stocks permitted under the Hong Kong Stock Connect mechanism, bearing risks from differences in investment environment, targets, market systems, and trading rules, including overseas market risk, high volatility in Hong Kong stocks (T+0 trading, no price limits, potentially sharper swings than A-shares), exchange rate risk (fluctuations may cause losses), and trading day discontinuity risk (when mainland markets are open but Hong Kong is closed, Hong Kong stocks may not be sellable, posing liquidity risks).
General Risk Warning: 1. This mixed fund carries higher risk and return potential than bond or money market funds but lower than stock funds; risk rating is 4R - Growth型; specific ratings provided by the manager and distributors apply. 2. Hong Kong investment risks include high volatility, currency risk, and trading discontinuity. 3. Read the fund contract, prospectus, and other legal documents carefully; choose products matching your risk tolerance. 4. The manager does not guarantee profits or minimum returns. Past performance and NAV do not indicate future results; other funds' performance does not guarantee this fund's results. 5. Investors bear investment risks independently after decisions are made. 6. CSRC registration does not guarantee value, prospects, or returns, nor does it imply zero risk. 7. The fund is issued and managed by ChinaAMC; distributor Bank of Communications Co., Ltd. assumes no investment or repayment liability. 8. Views herein are for reference only, not substantive advice, promises, or legal documents. Investing involves risk; caution is advised.
Fee Structure: Management fee 1.20% p.a., custody fee 0.20% p.a. Class A charges no sales service fee but upfront subscription/purchase fees. Class C charges no subscription/purchase fees but a 0.40% p.a. sales service fee. Redemption fees are fully allocated to fund assets.
Class A Subscription/Purchase Fee Rates: [Table not reproduced]
Class C Redemption Fee Rates: [Table not reproduced]
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