In-depth Analysis of the Divergence Between China's November Retail Sales Data and A-Share Market Trends

• Total retail sales of consumer goods increased by only 1.3% year-on-year, the lowest record since 2023, far below the market expectation of 2.9% [1]
• Industrial added value grew at 4.8%, the lowest level since August 2024 [1]
• Car sales decreased by 8.3%, home appliances by 19.4%, and high-end baijiu by 13% in a single month [1]

As can be seen from Kweichow Moutai’s stock price trend, although consumption data continues to weaken, the A-share market remains active driven by policy expectations. Data shows that Moutai’s stock price was under pressure overall in 2024, but was relatively resilient during the policy-driven period starting in June [0].

• The central bank maintains “flexible and efficient” use of RRR cuts, interest rate cuts and other policy tools to keep liquidity abundant [2]
• Fiscal policy maintains a “more active” orientation, with the budget deficit rate expected to remain around 4% [2]
• The Central Economic Work Conference emphasizes “moderate stimulus” but avoids over-expansion [2]

1. Liquidity Premium
   : Continuous monetary easing provides sufficient liquidity support for the market
2. Policy Bottoming Expectation
   : The government releases stability signals to enhance investor confidence
3. Structural Adjustment Opportunities
   : Concepts like new quality productive forces receive valuation revaluation during economic transformation

1. Policy Effect Lag
   : Implemented policies need time to transmit to the real economy
2. Capital Rotation Demand
   : A-share’s relative valuation advantage emerges amid increasing global uncertainty
3. Technical Rebound
   : After previous adjustments, some sectors have repair needs

1. Sustained Fundamental Pressure
   : Structural issues such as weak consumption and real estate downturn have not yet been fundamentally resolved [1]
2. External Environment Complexity
   : Uncertainties like trade frictions and geopolitics increase
3. Diminishing Policy Space
   : The marginal effect of continuous stimulus policies decreases, and debt pressure rises

• Focus on sectors directly benefiting from policies: new infrastructure, artificial intelligence, high-end manufacturing
• Use volatility strategies to seize trading opportunities during policy release windows
• Control positions, avoid chasing highs, and emphasize safety margins

• Focus on whether consumption data shows an inflection point
• Pay attention to corporate profit improvement and select targets with definite performance
• Gradually shift from policy expectation-driven to fundamental-driven

• Adjust allocation based on the actual effects of economic transformation
• Focus on enterprises with core competitiveness and internationalization capabilities

1. Policy Under-Expectation Risk
   : If policy strength or effect is lower than expected, valuation support will weaken significantly
2. Economic Downturn Exceeding Expectation Risk
   : Continued deterioration of key indicators such as consumption and investment will suppress market performance
3. External Shock Risk
   : Unpredictable factors like geopolitics and changes in the global financial environment

The “policy expectation-driven valuation expansion” trend is still expected to continue in the short term, but its sustainability has obvious limitations. It is expected that this model will continue to play a role in the next 3-6 months, but as the marginal effect of policies decreases and fundamental pressure accumulates, the market will gradually return to fundamental-driven.

Investors should seize trading opportunities during policy windows, but also do a good job of risk management, focusing on possible inflection point signals of economic data in the second quarter of 2026. Before the establishment of a new economic equilibrium, market volatility may remain high, requiring more flexible investment strategies.

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[1] Yahoo Finance - “China’s November Retail Sales Slow to 1.3%, Lowest Record Since Pandemic Impact” (https://hk.finance.yahoo.com/news/中國11月零售銷售減速至1-3-疫情衝擊以來最低紀錄-024729839.html)

[2] Yahoo Finance - “Central Economic Work Conference Establishes Priorities, Decision-Makers Send Moderate Stimulus Signals” (https://hk.finance.yahoo.com/news/中央經濟工作會議確立優先事項-決策層承諾採取支持性貨幣和財政政策-104909324.html)

[0] Gilin API Data