Since the beginning of the year, the Wind consumer sector index has risen by over 3%, attracting increasing market attention to the consumer segment. Consumption holds a fundamental position in the national economy and serves as a lasting driver of economic growth. There are numerous consumer-related indices in the market, each with different focuses, making the selection of an appropriate index for investment a key consideration. Today, we will explore the indices and investment opportunities within the consumer sector.

What are the characteristics of different consumer indices? The market features a variety of consumer-related indices, some emphasizing traditional consumption like food and beverages, while others focus on emerging consumer themes. The CSI Consumer 50 Index and the CSI Hong Kong Stock Connect Consumer Theme Index are two representative indices, with products tracking these indices collectively exceeding 7 billion yuan in scale.

According to their index methodologies, the Consumer 50 Index selects securities from the A-share optional and main consumption sectors based on large scale and high operational quality, while the Hong Kong Stock Connect Consumer Index, as the name implies, selects its components from the Hong Kong Stock Connect universe. Both indices consist of 50 stocks, with no single stock exceeding a 15% weight.

In terms of industry coverage, the Consumer 50 Index spans 11 consumer-related sectors in A-shares, including food and beverage, household appliances, agriculture, forestry, animal husbandry and fishery, commercial retail, and textiles and apparel. The combined weight of the food & beverage and household appliances sectors reaches 75%. In contrast, the Hong Kong Stock Connect Consumer Index covers 8 consumer-related sectors, with the combined weight of food & beverage and household appliances at 39.2%, significantly lower than the Consumer 50 Index.

A closer look at the constituent stocks further highlights the differences between the two indices. The top ten holdings of the Consumer 50 Index include leading liquor companies such as Kweichow Moutai, Wuliangye, and Shanxi Xinghuacun Fen Wine, as well as home appliance leaders like Midea Group, Gree Electric Appliances, and Haier Smart Home. Conversely, the top ten holdings of the Hong Kong Stock Connect Consumer Index include names like Pop Mart, Yum China, and Anta Sports Products, representing new consumption themes and Hong Kong-listed consumer leaders that complement the A-share market.

Consumer sector exhibits low valuation and favorable policies In the secondary market, "low valuation" is often seen as a signal of safety margin. As of February 11, the trailing price-to-earnings ratios for the CSI Consumer 50 Index and the CSI Hong Kong Stock Connect Consumer Index were 17.0x and 18.6x, respectively. Their valuation percentiles over the past decade stood at 7.91% and 3.87%, indicating historically low levels.

The primary reason for the low valuation in the consumer sector lies in weak market expectations regarding the profitability of listed consumer companies. In response to insufficient domestic demand, the government has introduced a series of policies to stimulate consumption. For instance, since the second half of 2025, policies such as subsidies for replacing old consumer goods, elderly care service consumption subsidies, cultural and tourism support, and initiatives for new energy vehicles in rural areas have been implemented. These measures, through direct subsidies and financial support, focus on key areas and new consumption patterns, systematically boosting consumer activity and further strengthening consumption's role as a core driver of economic growth.

Furthermore, the Central Economic Work Conference at the end of 2025 included "deepening the implementation of actions to boost consumption" and "unleashing the potential of service consumption" as key economic tasks for 2026. It is anticipated that more policies will follow, continuing to support consumption recovery and forming a long-term policy "safety net."

Currently, some positive structural changes are emerging in China's consumer market, with new consumption patterns and consumer goods exports being viewed as a "second growth curve." In recent years, experience-driven and emotional consumption led by the younger generation have become trends, exemplified by the global popularity of Labubu. A number of local consumer companies leveraging China's supply chain advantages are also expanding overseas. Companies like Pop Mart, WH Group, and Haier Smart Home derive over 40% of their revenue from overseas markets, becoming important forces making the consumer sector more "cyclical-resistant."

For capturing investment opportunities in the consumer sector, index funds represent a convenient and efficient tool. Overall, considering the current low valuations and policy support, investors may consider focusing on opportunities within the consumer sector. Products such as the E Fund Hong Kong Stock Connect Consumer ETF (513070) and the E Fund Consumer ETF (159798) track the aforementioned indices, providing convenient tools for investors to capture the potential "recovery" trend in consumption.