The jump in China’s online retail sales in October sparked growth in shares of some of the country’s biggest internet companies, marking an increase of over 10% since the start of the year.
But, according to analysts, the “party” may not last, inflamed by lockdowns and advance sales.
While Beijing does not release exclusive data for the month for online retail sales, analysts estimate a 15% increase in October alone, according to calculations by Citi, Jefferies and Nomura.
With the news of the growth of online sales, Hong Kong’s Hang Seng Tech index rose 7.3% on Tuesday (15) after registering a jump in the shares of Alibaba Group Holding, Kuaishou Technology, JD.com and Bilibili.
Despite the euphoria of the market, closely watched by investors from the country’s tech giants, analysts say the drivers of growth in October could disappear in the coming months.
One of the reasons that boosted sales may be a greater than usual anticipation of the Double-11 e-commerce shopping festival, China’s biggest online promotional event, which takes place around Nov. 11.
“If our analysis is correct, we should see online sales data for November quite weak,” analysts at Citi said in a note. The statement adds that December points to a “relatively decent trend” should Covid-19 policies boost consumer confidence and colder weather lead to higher discretionary spending.
Other experts point to the fact that China’s retail sales fell by 0.5% year-on-year in October, also marking the first decline in five months.
And economists point out that a turnaround is unlikely by the end of the year, in part because policymakers seem uninterested in completely abandoning Covid-19 measures anytime soon.
“We think it’s still possible to see intermittent lockdowns in some cities, albeit in a more targeted fashion,” said Tao Wang, chief China economist at UBS Investment Bank Research.
“This could continue to impact consumption and service activities.”
Source: CNN Brasil
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