Will Chinese Stocks Ride the Lunar New Year Boom? Expectations for Record-Breaking Consumption [Weekend Money]

Media, Defense, and Construction Rally on Consumption Stimulus
Strength of March Two Sessions Stimulus to Be Key Going Forward

Could the Lunar New Year holiday spending boom become the spark for a rally in the Chinese stock market? Thanks to large-scale consumption-boosting measures rolled out by the Chinese authorities, this year’s Lunar New Year holiday (February 15-23) is expected to see spending reach an all-time high, but the key question is whether China can achieve an annual growth rate of 5%. In the end, many expect that the biggest variable Chinese equity investors should watch will be the Two Sessions in March.

According to Daishin Securities on the 21st, consumption during the 2026 Lunar New Year holiday is projected to hit a record high. Moon Geonwoo, a researcher at Daishin Securities, predicted, “Given the Chinese government’s preemptive support policies and the extension of the holiday period (from 8 days to 9 days), tourism revenue during the 2026 Lunar New Year holiday will far exceed 700 billion yuan, and box office revenue will significantly surpass 10 billion yuan.”

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The part of this Lunar New Year consumption-boosting package that investors should pay closest attention to is the “direct support.” According to China's Ministry of Commerce, the measures announced on the 11th include: 2.05 billion yuan worth of vouchers, subsidies, and cash payments; 1 billion yuan worth of lottery-style prizes and winnings; 70 million yuan worth of cultural consumption promotion campaigns; and the introduction of duty-free benefits of up to 10% for foreign tourists. The assessment is that the focus has shifted beyond mere slogans to substantially strengthening households’ capacity to spend.

On top of this came the message from the People’s Bank of China reaffirming its monetary-easing stance, and in the week leading up to the Lunar New Year holiday (February 9-13), the Chinese stock market saw gains widen, particularly in sectors expected to benefit from policy support. Even though the benchmark CSI 300 index only managed to close slightly higher, the interactive media sector jumped 10.2%, the defense sector rose 7.2%, and the building materials sector climbed 6.6%.

However, it is still too early to conclude that a full-fledged trend reversal is underway based on expectations alone. Researcher Moon assessed, “Despite heightened expectations for a Lunar New Year holiday boost driven by large-scale consumption stimulus, it is still premature to view this as a clear signal of a genuine domestic demand recovery,” adding, “The key variable that will determine China’s medium- to long-term growth trajectory is the strength of the policies to be presented at the Two Sessions in March.” Historically, the Chinese stock market has tended to move after the Lunar New Year holiday in line with policy expectations and the macroeconomic environment.

During last year’s Lunar New Year holiday, per capita spending was 169 yuan, still below the pre-pandemic 2019 level of 177 yuan. Retail sales growth in December was also just 0.9% year-on-year, marking a slowdown for seven consecutive months since May 2025. In the market, some cautious views are emerging that China may fail to achieve its 5% economic growth target this year.

Ultimately, the focus is on the Two Sessions in March. Attention is centered on whether the Chinese authorities will keep the growth target around 5%, and whether they will roll out strong stimulus measures such as fiscal expansion and additional monetary easing to achieve that target. If a stronger-than-expected policy package is announced, the consumer-related sectors that have begun to stir on the back of the Lunar New Year holiday could move beyond a short-term theme and enter a sustained rebound. On the other hand, if the strength of the policies falls short of market expectations, the recent rally led by policy-beneficiary sectors may also prove to be no more than a holiday-driven blip. Historically, the Chinese stock market has tended to move after the Lunar New Year holiday in line with policy expectations and the macroeconomic environment.

Researcher Moon said, “At the Executive Meeting of the State Council in January, the Chinese government presented consumption expansion as a core goal for the 15th Five-Year Plan period (2026-2030), and it followed up by announcing a private investment and consumption promotion package in January and a Lunar New Year consumption-boosting plan in February,” and added, “Even so, since these measures have not yet led to a tangible recovery, it is virtually certain that additional stimulus will be announced at the Two Sessions in March.” He went on, “If the growth target is maintained at around 5%, or if stimulus measures of comparable strength are presented, a sustained rebound in consumer-related sectors can be expected, using the Lunar New Year holiday as a turning point.”

This content was produced with the assistance of AI translation services.