Analysis of A-share Policy-Expected Valuation Expansion vs. Real Economic Data Divergence

• Sluggish Real Economy
  : November data from the National Bureau of Statistics shows that total retail sales of consumer goods grew only 1.3% YoY, far below the market expectation of 2.8% and hitting the lowest level since 2023; among them, auto retail fell 8.5% YoY, significantly dragging down overall consumption [1]. High-end liquor is experiencing “de-stocking + price cuts” in the channel; its YoY decline in November alone was 13%, exposing both brand premium pressure and channel digestion pressure. Representative enterprises are becoming the main pressure points for inventory adjustment dependent on sales momentum [2].
• Stock Price Trend and Consumption “Split”
  : Since the main uptrend started in June, the A-share index has continued to rise, but the retail sales growth rate fell from 6.4% to 1.3% during the same period, showing a clear divergence. The self-made comparison chart clearly presents the divergence between “rising valuations” driven by policy expectations and “monthly slowdown” in real demand [0].
• Policy Logic Remains the Main Support
  : The recent Central Economic Work Conference continued the tone of “coordination between proactive fiscal policy and prudent monetary policy” and emphasized stabilizing growth and promoting consumption through policy tools, but there were no new signals of systematic “interest rate cuts/reserve requirement ratio cuts + large-scale stimulus”. It relies more on policy expectations and limited liquidity supply to support valuations [3]. Before substantial improvements in fundamental shocks are seen, the market mainly relies on policy sentiment to maintain bullish momentum.

• Cycle Logic Judgment
  : In the short term, if policy expectations continue (such as credit easing, accelerated infrastructure, support for new economic sectors), A-shares, especially liquidity-sensitive sectors, can continue valuation expansion; however, the lack of obvious recovery in residential consumption/high-end liquor/auto sectors means that the “valuation level” needs to rely more and more on policy implementation.
• Boundary of Consumption Period
  : How long policy-driven valuation expansion can last depends on the intersection of “policy edge” and “performance verification window”:
  1. Time Window
     : Q4 2025 to Q1 2026 is critical—high-valuation industries such as consumption, auto, and liquor will release quarterly reports one after another. If leading consumer companies continue to show YoY negative growth or profit compression, policy expectations will be difficult to continue to “support the market”.
  2. Remaining Policy Space
     : If macro data still shows no improvement in the next few months, monetary policy space is limited (already maintained by liquidity tools), and fiscal policy needs to exert significant force to continue to reassure the market; once policy marginal weakens, valuation expansion will quickly face “performance acceptance” pressure.

• Trigger Conditions
  : The performance decline in consumption & high-end liquor sectors (such as sharp declines in revenue/net profit exposed in the third-quarter report) has already laid hidden dangers for valuations. If the KPIs for Q4 and Q1 2026 fail to turn positive (especially retail, auto, liquor, high-end manufacturing):
  • Institutional investors’ confidence in “policy supporting the market” will decline rapidly, leading to compression of valuation multiples;
  • Funds may shift from “policy expectation tracks” to “performance certainty”, increasing short-term market retracement pressure.
• Recommended Time Points to Watch
  :
  1. Whether retail/real estate/manufacturing data from late December to early January stops falling and stabilizes;
  2. Whether Q4 profits of liquor, auto, consumer electronics, etc., still maintain YoY decline;
  3. Whether policies will be upgraded in 2026—if pure expectation-based “stable growth” cannot be converted into physical investment or domestic demand growth, valuation expansion will be forced to return when the performance window opens.

• Defensive Strategy
  : Prefer core consumption and industries with “endogenous demand + pricing power”. Only after experiencing “revenue repair + channel de-stocking” during the financial report verification period can valuation factors be regained.
• Opportunity Capture
  : If policies continue to upgrade from “expectation” to “substantial liquidity + fiscal investment”, and consumption/real estate data gradually improve in Q1, you can layout in advance during the phase of “expectation exceeding expectation again”.
• Alert
  : Before policy games turn to substantial “economic recovery”, medium and long-term tracks with high valuations (such as high-end liquor, high-valued individual stocks in intelligent manufacturing) face short-term correction risks; large-scale underperformance may become a direct trigger for the market to test “policy-driven valuations”.

In the short term, the main uptrend of A-shares still uses policy tools as a fulcrum and continues to operate against the backdrop of obvious downturns in performance and consumption. However, if the revenue/profit data from December onwards continues to be sluggish and policies fail to strengthen, valuation expansion will quickly be tested by the performance window. It is recommended to continue tracking high-frequency consumption data and the progress of Q4 performance of liquor/auto sectors, and adjust positions when policy marginal expectations decrease to avoid valuation retracement risks.

The chart shows that since June 2025, the A-share index has continued to rise driven by the main uptrend (top chart; X-axis is date, Y-axis is index points), while the YoY growth rate of total retail sales of consumer goods has decreased month by month from 6.4% to 1.3% in November (bottom chart; X-axis is month, Y-axis is YoY growth rate), vividly showing the obvious divergence between “policy expectation valuation” and real economic growth [0].

[0] Jinling AI Data Chart Generation (June–November 2025: Divergence between A-share Index and Retail Sales Growth Rate)
[1] Reuters, China’s economy stalls in November as calls for reform grow (https://www.reuters.com/world/china/chinas-factory-output-retail-sales-weaken-november-2025-12-15/)
[2] 36Kr, “Falling Below 1499 Yuan, Even Moutai Can’t Be Sold”, https://m.36kr.com/p/3585007030434953
[3] ts2.tech, Shanghai Stock Market Week Ahead: Shanghai Composite Braces for Key China Data After Policy-Heavy Dec 8–13, 2025 (https://ts2.tech/en/shanghai-stock-market-week-ahead-shanghai-composite-braces-for-key-china-data-after-policy-heavy-dec-8-13-2025/)