Market Analysis: Consumption Recovery, Textile And Clothing Share Plate Strengthened Recently

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On this Friday, the textile and clothing sector strengthened again. As of the closing, Huasheng Shares (600156), Hasen Shares (603958), Shenzhen Zhonghua A (000017), Hongxing Shares (001209), Jiumuwang (601566), Taipingniao (603877), etc. all rose by the limit, while Fengzhu Textile (600493) rose by 5.42%. It is worth noting that Shenzhen China A has increased its trading limit for 9 consecutive trading days recently, and Hasson has increased its trading limit for 4 consecutive trading days.

The recent strength of the textile sector is mainly affected by the improvement of the extra clothing consumption situation. In December 2023, the total retail sales of domestic consumer goods will be 4355 billion yuan, up 7.4% year on year and 2.46% month on month. From January to December 2023, the total retail sales of consumer goods will be 47149.5 billion yuan, up 7.2% year on year.

Among them, the retail sales of clothing, shoes and hats, knitwear and textiles in December were 157.6 billion yuan, up 26% year on year and 4.86% month on month. The accumulated retail sales from January to December were 1409.5 billion yuan, up 12.9% year on year, indicating a strong recovery of domestic demand for textiles and clothing.

The monthly rate of retail sales in the United States recorded 0.6% in December, higher than the expected 0.4% and the previous 0.3%, the largest increase since September last year. As the world's largest apparel consumer market, the performance of the United States has also brought optimistic expectations to the market, increasing the confidence of the market in the active replenishment cycle of American apparel wholesalers in advance. The pessimistic expectation of global consumption has weakened, and the price of cotton and cotton yarn, the raw materials of textile and clothing, has shown a strong performance since December 2023. Many factors have driven the flow of funds to the textile sector, and the stock price has strengthened.

In the short term, the trigger for the strength of the textile and clothing sector may be the continued warming of the textile and clothing consumption data released by the National Bureau of Statistics on January 17, and the recovery of downstream sales orders.

In the long run, the fundamental reason for the strength of the textile and clothing sector may lie in the policy support behind the warmer demand data. Throughout the year, China's trade in goods has shown an obvious upward trend of stability, especially the recent rise in the growth rate of imports and exports in RMB for four consecutive months. The Central Economic Work Conference in 2023 proposed to expand high-level opening up, which pointed out the direction for foreign trade work in the future,

China's foreign trade has been further consolidated. In addition, in 2024, China is expected to strengthen foreign trade cooperation with countries building the "Belt and Road", including signing new trade facilitation agreements, building free trade zones, implementing tariff reductions, etc., and further releasing the RCEP dividend, the trade volume between China and countries building the "Belt and Road" will maintain a rapid growth momentum in 2024.

In 2024, the overall scale of China's foreign trade will expand, quality and efficiency will improve, and export will speed up. This, to a large extent, further validates the logic of consumption recovery in 2024.