Orient: Consumption may usher in a turning point in the second half of 2026, with significant differentiation in fundamental performance.

Orient releases a research report stating that the core of future consumption will be domestic demand, which may see a turning point in prosperity in the second half of 2026, reshaping consumption in the midst of disruption. 1) Considering the adjustment space and time for real estate prices, combined with the narrowing of the price decline since early 2026, the bank believes that residents and businesses have passed the most intense stage of deleveraging, and the suppression of consumption capacity and willingness due to deleveraging may significantly slow down in the second half of 2026; 2) External demand remains relatively strong, with sectors such as household appliances and automobiles with manufacturing advantages still having room for single-product dividends and increased market share; 3) In the short term, the bank is optimistic about the transmission of service consumption to goods consumption, but in the medium term, there is also a profound transformation in the underlying growth logic of consumption, with the continuation of the trend towards decentralized channels, incremental opportunities in new product categories and overseas markets, and the continuation of structural dividends. The report states that the core contradiction of consumption is no longer in the trading structure, and the key is prosperity. Overall, the mandatory consumption allocation ratio in 2026Q1 is at a historically low level since 2014, and the optional consumption allocation ratio is at a historically low level since 2023, indicating that the problem of deteriorating trading structure in the consumption sector has been resolved; the bank believes that the key reason for the low willingness to allocate to the consumption sector lies in the prosperity level and performance expectations: sectors such as household appliances, food and beverage, and complete vehicles are generally facing challenges such as high performance base, subsidy reduction, inventory pressure, and demand-side decline, and the ability and willingness of consumers to pay are still core constraining factors under the stage of deleveraging for residents and businesses. The bank found that there is a clear differentiation in the fundamental performance of the consumption sector: 1) Overseas demand remains relatively prosperous, with some companies in the household appliances and retail export chains still having good performance certainty. In contrast, domestic demand is constrained by consumption power still being at a trough stage, with sectors like hotel and tourism services having higher prosperity than goods consumption, and traditional sectors like food and beverage still being on the left side of the prosperity turning point; 2) Driven by geopolitical factors and the supply-demand cycle of Shenzhen Agricultural Power Group itself, the upstream industries of agriculture and textile manufacturing in the consumption chain benefit from supply-side optimization, leading to a high level of prosperity, while downstream consumer-facing industries, especially those at the consumer level, face upward cost pressures and downward product price pressures, putting pressure on profits.