Is Discretionary Spending back on the rise in China?

In this edition of the Bullfinder AI newsletter, we take a deeper dive into the current state of the Chinese Discretionary Spending Market and explore an associated ETF - Global X’s MSCI China Consumer Discretionary ETF (CHIQ).

Discretionary Spending on the Decline since 2021…

Since it’s peak in 2021, Chinese Discretionary consumer spending has been on the decline. Bullfinder AI tech identified bearish risk toward the end of 2021 at approximately $26, with price subsequently falling to a low of $13.61 late 2022. From it’s peak in 2021 of ~$44, CHIQ fell approximately -69%.

2024’s Early Signs of Recovery in Consumer Spending…

Retail spending within the first 2 months of 2024 resulted in a YoY increase of 5.5%. Additionally, food service spending increased 12.5% showing signs of increasing consumer confidence.

One notable component of consumer spending was the increase in air passenger spending by a whopping 44%, showing air travel for business and personal engagements has rebounded since the pandemic era.

Although early in 2024 clothing and cosmetics experienced only a moderate gain of 4%, this cautious approach to consumer spending may have changed as the year has progressed.

Surprising Consumption Growth Category…

China’s automotive sales segment experienced healthy growth early in 2024, however surprisingly, Electric Vehicles sales saw a considerable boost, up 37% during that same period.

Over the initial periods of 2024 it is clear that Chinese spending prioritised higher cost categories such as international-travel, vehicles and home appliances… But is discretionary spending set to continue increasing into the later parts of 2024 and beyond?

Bullfinder AI Tech Re-Rating…

Recent developments in October of 2024 has our Tech & Team intrigued in this particular market segment for the weeks and months ahead.

Our Smart Tech identified CHIQ as showing signs of Bullish potential in Oct of 2024, tentatively re-rating CHIQ’s momentum accordingly, with bullish continuation potential if price is able to hold above ~$19.00

What’s next?

Although there has been a recent change to the Bullfinder AI Momentum rating for Chinese Discretionary Spending market, our Tech & Team will continue to monitor markers across the industry in the event there is a rapid change.

Our Founding Team would like to note caution should price decrease below $18.80. We anticipate that if price cannot sustain a price above approximately $18.80, then the Bullfinder AI Tech may just re-rate this commodity as Bearish.

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