Spring Festival trading big red envelope, besides AI, there are also consumption, RMB

As the Spring Festival of 2026 approaches, the Chinese consumer market is releasing some positive signals. From the recent wave of flagship model releases in the domestic internet and AI industries to the renminbi breaking the 6.9 mark on the 12th, the market is observing Chinese consumer sentiment and corporate pricing power during this important window period.

According to news from the Chasing Wind Trading Desk, based on JP Morgan's strategic framework around the Spring Festival and Bank of America's latest consumer survey, the market is simultaneously trading on three clues: the structural recovery of consumption, changes in risk appetite brought about by a stronger renminbi, and the redistribution of profits due to rising upstream costs. These three clues are not contradictory but will make the stock selection logic for 2026 more "refined."

It is worth mentioning that this report also disclosed the usage of AI by Chinese consumers: 39% of respondents use AI tools multiple times a week, and 24% use them daily, mainly for shopping advice and itinerary planning. More than one-third of users reported saving 3-5 hours per week, while another 32% saved 6-10 hours.

Consumption: "Upgrading More Rationally"

JP Morgan defines one of the main lines of the Spring Festival trading as "the upward option of consumption," with the core judgment being: after peaking in the first half of 2021, household balance sheets have continued to recover, and the household leverage ratio has fallen to slightly below 60% (GDP basis). "The ability to consume" still exists, but the consumption mindset is more pragmatic—willing to pay for "quality" and "certain experiences," but more cautious about impulsive consumption that is not essential.

This aligns with Bank of America's survey: in February, 45% of respondents reported increased spending and outings in the past two months (up from 38% in December), while 49% expect to increase spending in the next six months (up from 30% in December). However, Bank of America also emphasized that this improvement largely stems from seasonal factors related to the upcoming Spring Festival and the 9-day long holiday driving service consumption and travel.

More notably, the "stratification" of consumption continues. Bank of America mentioned that the increase in willingness to spend during the Spring Festival mainly comes from high-income groups: among those with an annual income of over 500,000, 76% expect their spending during the Spring Festival to increase, while only 44% of low-income groups do. This means that for companies, a dual approach of high-end and cost-effectiveness will become a more realistic market structure: companies that can capture "high-end upgrades" will improve income quality more quickly.

JP Morgan also listed typical products and scenarios for which consumers are "willing to spend" during the Spring Festival: high-end smartphones, liquor, quality food and beverages, gold and jewelry, and travel. For example, the wholesale price of Moutai has rebounded before the festival (JP Morgan cited data showing that the wholesale price of 53-degree Feitian Moutai rose from about 1,495 yuan/bottle in mid-December to about 1,710 yuan/bottle at the end of January), reflecting the concentrated release of demand for gifts and banquets, as well as adjustments in supply rhythm.

Travel and Service Industry: Short Cycle Certainty is Strong, but Beware of High Base

If the recovery in commodity consumption is more "structured," then the most certain aspect of service consumption remains travel. A Bank of America survey shows that the willingness to travel during the Spring Festival is rising across the board: the proportion of domestic short-distance travel plans has increased to 36% (up from 25% last year), and plans to travel to Hong Kong and Macau have risen to 21%. JPMorgan also cited institutional forecasts indicating that non-commuting travel across counties during the Spring Festival may reach 1.068 billion trips (up 11.7% year-on-year).

However, service consumption is not "one-sided." JPMorgan has given a more cautious assessment of the box office during the Spring Festival: in the context of a high base in 2025 and the lack of phenomenon-level blockbusters, the box office for the Spring Festival in 2026 may see a slight year-on-year decline. This serves as a reminder to the market: the "long holiday dividend" is more direct for travel, but for alternative consumption such as online entertainment, the marginal elasticity may not be equally strong.

Renminbi: Risk Appetite "Favorable," but Profit Impact is Highly Differentiated

A key observation from JPMorgan is that a stronger renminbi often corresponds to a decline in the risk premium of Chinese assets, historically creating a "tailwind" for Chinese stocks, particularly benefiting growth and cyclical sectors. Their statistics show that in multiple phases since the end of 2016, when the renminbi appreciated significantly against the US dollar, the average increase in MSCI China has been considerable.

More importantly, JPMorgan has set the renminbi path for 2026 as "moderate appreciation." Under this assumption, the market will experience two layers of impact:

• Valuation Level: More stable exchange rate expectations help restore the willingness of foreign capital to allocate to renminbi assets, typically first reflected in the relative returns of high-beta sectors.
• Profit Level: Differences among industries and companies will be rapidly amplified. A typical beneficiary identified by JPMorgan is aviation—due to the high elasticity of profits from US dollar liabilities and jet fuel costs; conversely, those more pressured are manufacturing chains with high export ratios, thin margins, and price sensitivity.

This is also why JPMorgan emphasizes that "stock selection becomes more nuanced": facing the same renminbi appreciation and rising costs, some companies can pass on costs (such as certain parts of the Apple supply chain, automation, power batteries, etc.), while others are more easily squeezed (with pressure concentrated in automotive, consumer electronics, home appliances, etc., as pointed out by JPMorgan).

Rising Costs: A Reassessment of "Pricing Power" is Happening

As we enter 2026, a variable that differs from 2025 is that the rising prices of metals, chips, and materials are becoming more "systematic." JPMorgan has listed the price increases of copper, aluminum, lithium salts, DRAM, etc., directly pointing to cost pressures on the manufacturing side. For the market, this will trigger a repricing of corporate profit quality: who has pricing power, who has product upgrades, who has overseas layout and hedging capabilities, is more likely to maintain profit margins. **

It is noteworthy that there is a "rational upgrade" on the consumer side and "cost re-inflation" on the supply side: on one hand, consumers are more concerned about quality and experience, willing to pay for certainty; on the other hand, upstream costs make the "low-price competition" business model harder to sustain. The combination of these two factors may lead to a relatively positive outcome: if "quality" consumption spreads to high-frequency categories (food, condiments, dairy products, etc.), JP Morgan believes this could provide potential support for CPI, nominal growth, and corporate EPS—this is a variable that has been easily underestimated in the relatively low inflation environment of the past few years.

Comprehensive Judgment: After the Spring Festival, the market needs to answer three questions

Combining the views of two institutions, the Spring Festival provides more of a "window period for sentiment and data," rather than the endpoint of macro narratives. What the market really needs to verify after the holiday may be three things:

1. Can the consumption recovery extend from "holiday-driven" to "normalized upgrade" (high-frequency data looking at the subsequent slope of dining, hotels, and travel; on the corporate side, looking at price increases and new product releases)?
2. Will a relatively strong RMB lead to a more sustained improvement in risk appetite, as well as the continuity of foreign capital inflow?
3. Under rising costs, will the differentiation in corporate profits exceed expectations—especially in industries like automobiles, consumer electronics, and home appliances that are "both competitive and material-intensive," where the market may quickly lower profit expectations.

From an investment perspective, JP Morgan tends to position "consumption + services" upward options before and after the Spring Festival, emphasizing more refined choices around pricing power; meanwhile, Bank of America's survey suggests a more realistic backdrop: Consumption is improving, but there is still a clear stratification and cautious asset allocation habits. This determines that the narrative for Chinese assets in 2026 is likely to be "moderate recovery + structural differentiation," rather than a comprehensive market driven by a single variable