China Galaxy Securities: Consumer sector defense and allocation values highlight suggestions to focus on high-quality leaders in the industry

The Zhitong Finance App learned that China Galaxy Securities released a research report saying that the consumer sector is showing strong defensive attributes in the current market, increasing the level of dividends, and providing support in dividend yields. The bank is concerned about the strength of policies to boost consumption in the second half of the year. The worst period for real estate may be over, which is conducive to stabilizing residents' financial expectations and improving consumption. Maotai continuously raised retail prices on the i-Maotai platform, which has the significance of a weather vane. Currently, the value of consumer sector defense and allocation is prominent, and it is recommended to focus on high-quality leaders in the industry.

The main views of China Galaxy Securities are as follows:

Consumer sector defense and allocation values highlighted

1) Since 2021, the SW consumer index market performance has been under pressure. From 2021 to 2023, it fell 8.05%/14.63%/13.24%, respectively, and stabilized at -1.14%/+2.72% from 2024 to 2025, mainly during the period when consumption boosting policies represented by trade-in policies were gaining strength. Since the beginning of 2026, the market style is biased towards technology, compounded by weak consumption fundamentals, leading to a 16.81% decline in SW consumption. 2) The consumer sector is showing strong defensive attributes in the current market. From the beginning of July to July 17, the Shanghai and Shenzhen 300/GEM Index/Science and Innovation 50 fell 9.04%/21.05%/22.30% respectively, while the SW category style consumer index rose 1.09% this month, with significant relative returns. 3) After long-term adjustments, the consumer sector's holdings are low, and the chips have clearly been cleared. As of 26Q1, the total market value of active funds' heavy holdings in the consumer sector (SW Textiles/Home Appliances/Agriculture/Light Industry/Commerce/Social Services/Food and Beverage) accounted for 8.50% of the total market value of active funds, a significant decrease from 23.46%, which was a high of 22Q4. 4) The current level of dividends in the consumer sector has increased, and dividend yields provide support. On July 17, 2026, SW Food and Beverage/Household Appliances had dividend rates of 4.34%/3.95% respectively in the past 12 months. The rest of the SW consumer sector was affected by industry attributes, and the absolute dividend ratio was low, but they were all at a high quantile level in recent years.

Focus on the strength of policies to boost consumption in the second half of the year

1) Starting in July 2024, the government began boosting consumption, and there were many policies during this period. Since the beginning of 2026, the consumer stimulus policy has been weaker than in 2025, leading to a decline in consumer subsidies, and the market has fully responded to this. 2) From January to June 2026, consumer society had zero losses, +1.3% year-on-year. In this context, on July 13, the State Council issued an approval on the “15th Five-Year Plan” to expand consumption. The “Plan” basically continues the ideas of the previous “15th Five-Year Plan” and makes systematic arrangements in 6 areas and 28 key tasks and initiatives. By 2030, the overall scale of the consumer market will continue to expand, the consumer consumption rate will increase markedly, and the whole society's consumption of goods and services will grow rapidly, and the total retail sales of social consumer goods will reach about 60 trillion yuan (CAGR 3.7% from 2025 to 2030).

The steady improvement in second-hand housing prices in the first-tier market is a leading sign of consumption

1) In recent years, the long-term decline in housing prices has led to shrinking residents' wealth and insufficient purchasing power. The second-hand housing market began to pick up in 2026Q1, and the volume of transactions increased in 2026Q2. According to data from the China Index Research Institute, the “Xiaoyangchun” market in some core cities in March showed that second-hand housing transactions in Shanghai/Beijing were +6%/+3% year on year; in April and June 2026, second-hand housing transactions were +13.4%/+19.3%/+12.6%, respectively. Among them, Shanghai was +24%/+31%/+23%, respectively, and Beijing and Shenzhen also continued to improve. 2) Second-hand housing prices in first-tier cities took the lead in recovering from the bottom. According to data from the National Bureau of Statistics, since March 2026, the second-hand housing sales price index in first-tier cities among 70 large and medium-sized cities ended its month-on-month decline and continued to rise. From March to June, it was +0.4%/+0.4%/+0.3% month-on-month, respectively. The above shows that the worst period for real estate may be over, which is conducive to stabilizing residents' financial expectations and improving consumption.

Maotai raised prices several times this year, a sign that high-end liquor consumption is bottoming out

In recent years, the price of high-end liquor has continued to fall, and the price of Maotai liquor is one of the trends in the consumer market. Since 2026, Maotai has continuously raised retail prices on the i-Maotai platform, which is a weather vane. The retail price of the i-Maotai platform is lower than that of public e-commerce platforms, and it has become a gripper for companies to quickly expand and seize C-side demand. Since the iMaotai platform's sales volume in 2026, the public platform has been able to maintain a relative premium, indicating that the channel no longer has too much Maotai inventory. Since March, the iMoutai platform has continuously raised prices. The retail price of Kweichow Moutai (2026) was raised on March 31, and the retail price of non-standard products such as 15-year old brands, boutique products, Chinese Zodiac Premium, and kg packs was raised on May 16. Starting at 00:00 on July 18, the retail price of Feitian 53% vol 500ml Kweichow Moutai Liquor (2026) will be raised from 1,539 yuan/bottle to 1,639 yuan/bottle, and the sales contract price will be raised from 1,269 yuan/bottle to 1,369 yuan/bottle, with an increase of 100 yuan per bottle. Continued price increases indicate that Maotai's current sales pressure is low.

Risk warning: risk of policy implementation falling short of expectations; risk of insufficient consumer demand; risk of increased market competition.