Boosted by confirmed annual report performances, Hong Kong-listed new consumer stocks are attracting accelerated investment from mutual funds due to their low valuations and high earnings flexibility. In March, the dual catalysts of strong corporate results and positive online retail data have heightened fund managers' sensitivity toward consumer sector allocations. Previously undervalued and thinly traded, the new consumer segment is now seeing a shift from cautious观望 to active buying by mutual funds, driven by better-than-expected annual reports from leading companies and a 9.2% growth in online consumer spending during the first two months of the year. The improving sentiment in Hong Kong's new consumer sector is transitioning from expectation to realization.
Strong performances are frequently emerging from heavily weighted stocks in mutual fund portfolios, reinvigorating the long-dormant new consumer segment. Several leading companies within consumer industry sub-sectors, heavily held by mutual funds, achieved simultaneous high growth in revenue and profit in 2025, pushing their stock prices out of bottom ranges and contributing significant excess returns to fund portfolios. Against a backdrop of volatility in technology stocks, new consumer plays are beginning to provide hedgeable returns for fund managers.
China East Education, a company focused on vocational training in beauty, hairdressing, and pet care—areas aligned with young consumer demand—reported 2025 revenue of 4.616 billion yuan, up 12.1% year-on-year, and a net profit of 756 million yuan, surging 47.5% year-on-year. Both revenue scale and profitability improved simultaneously. As of December 2025, the stock was heavily held by institutions such as Ping An Fund and Great Wall Fund, with its strong growth likely reinforcing fund confidence.
In the value-for-money consumption segment, similar cases of mutual fund clustering and earnings surprises have appeared. Guoquan, a leading hotpot ingredient chain supermarket heavily invested in by top mutual funds like Southern Fund and Invesco Great Wall Fund, also benefited from the consumption recovery. In 2025, Guoquan reported revenue of 7.81 billion yuan, a 20.71% increase, and net profit attributable to shareholders of 433 million yuan, soaring 87.76% year-on-year, demonstrating notable profit elasticity. Notably, Guoquan’s stock price has risen 25% since the start of 2026, with a 12-month cumulative gain of 1.5 times, performing on par with technology stocks favored by funds.
Beyond these examples, new consumer companies heavily weighted by mutual funds such as E Fund, Bank of China Investment Management, Bosera Fund, and Zhong Ou Fund have also shown strong stock price elasticity following earnings disclosures. Leading players in various sub-sectors—including Huazhu Group, Buluke, Pop Mart, Shanghai Beauty, and JNBY—all delivered solid growth in 2025 and saw their stock prices rise in early 2026. Among them, Huazhu Group contributed nearly 40% in returns to fund managers over the past four months, while JNBY, heavily held by Invesco Great Wall Fund, gained over 15% year-to-date. JNBY’s stock price has climbed for four consecutive years, with a cumulative increase of 3.27 times, delivering substantial returns to patient fund managers.
The increased allocation by mutual funds to the new consumer sector is supported not only by confirmed past performance but also by favorable trends for the coming year. On March 16, the National Bureau of Statistics released the "online retail sales of goods and services" indicator for the first time, showing that national online retail sales reached 3.2546 trillion yuan in January–February 2026, a 9.2% year-on-year increase. This growth rate significantly outpaced the 2.8% rise in total retail sales of consumer goods over the same period. One fund manager noted that online consumption largely reflects young consumers' preferences for emerging physical goods and service-based consumption, indicating a healthy recovery and suggesting that the consumer sector still offers quality investment opportunities in 2026. The strong momentum in online and service-based consumption provides confidence for further fund increases in consumer sub-sectors.
Notably, in terms of stock selection, mutual funds currently show a clear structural preference within the consumer sector, focusing on companies with high gross margins, brand premiums, exposure to high-end markets, or overseas expansion potential. Huang Yisong, portfolio manager of Penghua Consumer Preferred Fund, stated that within the consumer space, his fund will emphasize long-term themes such as youth-oriented consumption, self-indulgence spending, the rise of domestic brands, and improved quality-to-price ratios. Key areas include food, gold jewelry, cosmetics, and small household appliances, with a moderate increase in allocation to the gaming sector. These segments generally feature high gross margins and earnings flexibility, making them well-positioned for volume and price growth amid consumption upgrades.
Zheng Shiyun, manager of the Southern Emerging Consumer Growth Fund, highlighted the particular value of export-oriented consumer companies targeting high-end markets in Europe and the United States. Unlike traditional export sectors competing mainly on price, high-end consumer exports cater to affluent overseas consumers, offering stronger pricing power and the potential for above-expectation net profit margins. From a competitive standpoint, high-end markets are dominated by established international brands, but high-quality Chinese companies are gradually gaining market share through product strength and supply chain advantages. Changes in external trade conditions act as a stress test, helping identify leading companies with robust products, strong bargaining power, and stable operations. Periods of exchange rate or tariff volatility often present attractive long-term entry points.