Zhike | The 2025 Trade-in Policy is Introduced, Which Sectors Will Benefit?
This week, A-shares continued the downtrend since the beginning of the year. The Shanghai and Shenzhen indexes maintained a low-volume oscillation. Except for the STAR50 Index, which slightly rose, the other indexes all closed lower. Overall, the gains and losses of the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, CSI 1000, SSE 50, and STAR50 were -1.34%, -1.02%, -2.02%, -1.43%, -1.04%, and 0.93%, respectively.
From the perspective of trading volume, the total trading volume of the Shanghai and Shenzhen stock markets decreased by nearly 15% compared with the previous week, indicating that the market sentiment remains sluggish. The market is mainly dominated by the game of existing funds, and the money-making effect is poor. In terms of financing balance, the financing balance continued to decline this week. Disturbed by uncertain factors at home and abroad, the market's risk appetite for funds continues to decline, and the deleveraging feature is significant.
By industry, this week, there were more declines than rises in the industries. Among the 31 first-level industries in Shenwan, only 8 rose, and the rest remained in decline. Household Appliances (2.09%), Comprehensive (2.09%), and Non-ferrous Metals (2.00%) had the largest gains; Commerce and Retail (-6.57%), Coal (-5.17%), and Food and Beverage (-3.46%) had the largest declines.
By sector, among the concept sectors, the PEEK Material Index, Humanoid Robot Index, GPU Index, etc., had good gains; the Duty-free Store Index, Generic Drug Index, and Anti-obesity Drug Index had large declines.
01 The market continues to oscillate, waiting for the opportunity point after the Spring Festival
Recently, the continuous decline in the market has sharply increased the pessimism of investors, causing many investors to start looking for the reasons behind the decline. However, this week, there are essentially no obvious negative factors in the market. The macro events announced at home and abroad have basically had a relatively sufficient expectation in the early stage. Therefore, this round of decline is likely due to the fact that during the policy vacuum period, market funds tend to be cautious, the wait-and-see sentiment of incremental funds has increased, and the game of existing funds has intensified market fluctuations, thereby reducing the market's risk appetite and trading willingness to a certain extent, further intensifying the market's adjustment pressure.
From the perspective of fundamentals, this week, China announced the inflation data for December 2024 and the whole year. The data shows that in December 2024, China's CPI was flat month-on-month, and year-on-year it slightly dropped from 0.2% to 0.1%. For the whole year of 2024, CPI rose by 0.2% year-on-year; in December 2024, the national PPI turned from a 0.1% month-on-month increase to a -0.1% decrease, and year-on-year it narrowed from -2.5% to -2.3%. For the whole year of 2024, the domestic PPI fell by 2.2% year-on-year.
Overall, the year-on-year CPI in December slightly declined, mainly due to the drag of food factors. Recently, the weather has warmed up, which is conducive to the production and transportation of agricultural products, resulting in an abundant supply of fruits, vegetables, and meat, driving the year-on-year food price to decline from 1% to -0.5%. Industrial consumer goods and service CPI showed a recovery trend. On the positive side, the core CPI has bottomed out and recovered for three consecutive months, showing certain signs of recovery, providing a positive factor for the warming of inflation in 2025. In terms of PPI, the year-on-year decline in PPI narrowed slightly in December, but it turned negative month-on-month again. The number of sub-categories with a month-on-month decline increased from 11 to 13. Among them, the price of production materials decreased from 0.1% month-on-month to 0%, and the price of living materials decreased from 0% month-on-month to -0.1%. Overall, the weakness of inflation still reflects the problem of insufficient domestic demand and the greater pressure on economic growth, but at the same time, it also provides more policy operation space for the future.
Overseas, this week, the Federal Reserve released the minutes of the December monetary policy meeting. The minutes indicate that if the economic data meets expectations, the Federal Reserve will be appropriate to continue to steadily move towards a more neutral policy stance, and it is at or near the point where the easing pace should be slowed down. After the hawkish view was released, it quickly triggered market fluctuations, the US dollar index rose sharply in the short term, and non-US currencies generally fell. Affected by this, the concerns of global funds have significantly increased, and the risk-averse sentiment has obviously risen, causing different degrees of impact on other major equity assets including A-shares.
Looking forward to the future market, considering that it is still in the policy vacuum period before the festival, the verification of fundamentals still requires time, and as the Spring Festival holiday approaches, the demand for market funds to be withdrawn will also increase. Coupled with the disturbances of peripheral geopolitical risks, there are still many uncertainties. Therefore, it is expected that the market will maintain an oscillating and consolidating trend in the short term, and the opportunity point may appear after the Spring Festival. On the one hand, with the support of loose policies, it is expected that funds will return, thereby driving the market sentiment to recover; on the other hand, after this round of decline, some stocks have shown an oversold trend, and there is a demand for a rebound after the festival. According to statistics from Green Fund, the number of stocks that have fallen below the closing price on September 25 has approached 700, of which those with a market capitalization of more than 10 billion account for nearly half. The fundamentals of these companies have not deteriorated significantly, and it is most likely just a valuation reduction; finally, from the past, it is generally easier to have a good start after the Spring Festival.
02 The 2025 trade-in policy is introduced, what is the impact?
On January 8, the National Development and Reform Commission and the Ministry of Finance issued the "Notice on Strengthening and Expanding the Implementation of Large-scale Equipment Renewal and Consumer Goods Trade-in Policy in 2025". Among them, the key points worthy of attention in the trade-in part are:
1. In terms of vehicle trade-in, on the basis of the "Notice on Further Improving the Relevant Work of Vehicle Trade-in" (Business Consumption Letter [2024] No. 392), fuel passenger vehicles that meet the National IV emission standard will be included in the scope of used vehicles that can apply for scrap and renewal subsidies. At the same time, individual consumers who transfer passenger vehicles registered under their own names and purchase new passenger vehicle will be given vehicle replacement and renewal subsidy support.
2. In terms of home appliance products, in addition to the trade-in of 8 types of home appliance products in 2024, 4 types of home appliance products such as microwave ovens, water purifiers, dishwashers, and rice cookers will be included in the subsidy scope in 2025. At the same time, the number of air conditioning product subsidies for each consumer has been upgraded from 1 to 3. Moreover, individual consumers who have enjoyed the trade-in subsidy in 2024 can continue to enjoy the subsidy when purchasing the same type of home appliance products in 2025.
3. For individual consumers to purchase 3 types of digital products such as mobile phones, tablets, and smartwatch bracelets (with a single sales price not exceeding 6,000 yuan), a subsidy of 15% of the product sales price will be given. Each consumer can be subsidized for 1 piece of each type of product, and the subsidy for each piece does not exceed 500 yuan.
4. Increase the subsidy for consumers to purchase the items and materials used in the process of carrying out old house decoration, partial renovation of kitchens and bathrooms, and home aging-friendly renovation, and actively promote smart home consumption, etc.
5. Support the recycling and treatment of waste electrical and electronic products: In 2025, the central government will continue to arrange special funds to support the recycling and treatment of waste electrical and electronic products in the form of "awarding subsidies instead of direct subsidies".
Judging from the implementation effect of the trade-in policy in 2024, according to the data from CICC, the scale of fiscal subsidies in 2024 is approximately 150 billion yuan, of which more than 110 billion yuan was in the fourth quarter. With the accelerated implementation of the trade-in policy, the growth rate of retail sales of trade-in goods increased from -5.4% from June to August to 6.6% from September to November, with an improvement of 12.0 percentage points, while the growth rate of non-trade-in goods retail sales decreased by 0.4 percentage points during the same period, corresponding to an increase of 214 billion yuan in retail sales.
It can be seen that the trade-in policy has a very obvious boost to the consumption of related categories. However, because the actual policy implementation period in 2024 is only about 4 months, the overall driving effect on the total social retail sales is not as obvious as that of related categories. Compared with 2024, the 2025 trade-in policy has a wider coverage, greater support, and an earlier policy introduction time, and the actual implementation time will be much longer than that in 2024. In this context, it is expected that the subsidy intensity in 2025 may exceed that in 2010, becoming the year with the strongest consumer goods subsidy intensity. This will help further release the consumption potential, activate the existing market, and create new consumption growth points, thereby likely having a more obvious boosting effect on the total social retail sales in 2025.
From the perspective of investment, the sectors with increments in the 2025 trade-in have better investment opportunities. For example, the air conditioning chain, some small household appliance chains, consumer electronics chains, and passenger vehicles and related component chains, etc.
*Disclaimer:
The content of this article only represents the author's views.
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