China's plan to boost consumption by encouraging trade-ins has yet to show results
Published On Sep 12, 2024, 7:10 PM
China's initiative to enhance consumer spending through a trade-in program has not yet yielded significant outcomes following its announcement in late July. Though the government allocated approximately 300 billion yuan to subsidize trade-ins for cars and appliances, executives from various companies report a lack of concrete incentives from this program. The EU Chamber of Commerce in China highlighted that local governments are only beginning to detail these trade-in policies. Analysts predict that this scheme will only marginally benefit retail sales, with estimates suggesting it could support about 0.3% of retail sales in 2023. Companies like Otis and Kone also expressed cautious optimism for future opportunities as the rollout of this initiative progresses.
Stock Forecasts
OTIS
Negative
Given that the trade-in program is struggling to gain traction and may not have a significant immediate impact on consumer spending, companies reliant on consumer discretionary spending, especially in the appliance or automotive sectors, may experience continued weakness in sales. Therefore, investors might consider adopting a cautious stance with respect to stocks in these sectors.
RERE
Negative
With the potential long-term growth in the secondhand goods market as the policy unfolds, companies like ATRenew might stand to benefit in the future. However, the short-term impact remains uncertain. For investors, this might signal a moderate opportunity to watch but could indicate a negative perception for immediate trading.
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China's plan to boost consumption by encouraging trade-ins has yet to show results
Sep 12, 2024, 7:10 PM
Several major cities and provinces have only in the last few weeks announced details on how the trade-in program would work for residents.