The Chinese Generation Z is leading the recovery of the sluggish domestic market after the trade war. Analysis suggests that the consumption patterns of Generation Z, referred to as 'emotional consumption,' are reshaping trends in the Chinese stock market.

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On the 16th (local time), Bloomberg reported that brands reflecting the preferences of Generation Z (born 1995-2010) in China are showing significant increases in performance and stock prices. Toy manufacturer Pop Mart, traditional gold jewelry brand Laopu Gold, and beverage chain Mixue are cited as representative beneficiary corporations. These corporations have recently seen both sales and stock prices surge by double digits, thanks to the consumption trends of Generation Z.

According to Bloomberg, Chinese Generation Z shows tendencies of 'emotional consumption,' oscillating between saving and overspending depending on the item. For example, they may save by using coupons for a bubble tea but are willing to spend hundreds of dollars in areas they are passionate about. Popular items among them include K-pop idol goods, figures, niche perfumes (premium perfumes targeting specific tastes), cosmetics, and traditional jewelry. Generation Z in China tends to consume items that provide emotional satisfaction, showing little interest in traditional investment assets like real estate.

These consumption tendencies are also making an impact on the Chinese stock market. This year, the stock prices of popular Generation Z favorites like Pop Mart, Laopu Gold, Mixue, and Mao Geping Cosmetics have more than doubled. Notably, Laopu Gold's stock price has skyrocketed more than 15 times since its listing last year, and the recently listed beverage brand Auntea Jenny has risen about 13% compared to its public offering price.

In contrast, Guizhou Moutai, a high-end liquor company targeting the older generation, has experienced a continuous decline since hitting a record high in 2021, and the appliance manufacturer Haier has also posted poor results.

The IPO market is also being reshaped around Generation Z. Custom card manufacturer Kayou, fast-food chain Xiao Noodle, and toy brand Top Toy are among the Generation Z-targeted corporations that are pushing for listings, increasing investor interest in related themes. However, there are concerns that these stocks may exhibit strong volatility, posing risks to investors.

Experts diagnose Generation Z's emotional consumption as a structural change rather than a temporary phenomenon. They analyze that these consumers have moved away from valuing utility relative to price and are now spending money on brands and experiences that reflect their identity and emotions. Mark Tanner, executive director at the Shanghai consulting firm China Skinny, predicts that 'for the time being, Generation Z is likely to dictate the landscape of the Chinese market.'