China Consumer: A touch soggier – China retail softens again in August, with easier comps offering some relief ahead

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

15 September 2026

This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the

territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan.

China Consumer

A touch soggier – China retail softens again in August,

with easier comps offering some relief ahead

China’s August retail sales print reinforces our cautious view: easier comps may

support headline growth into year-end, but the underlying demand recovery

remains weak and is not yet sufficient to underwrite a broad sector earnings

rebound. Headline retail sales growth slowed to +0.4% YoY (vs +0.6% in July), and

missed Bloomberg consensus (+0.8%). Looking ahead, low bases in subsidycovered categories, including autos, building materials, and home appliances,

should begin to support headline growth in Sep-Dec. However, we would not

interpret this as evidence of a genuine demand inflection, given retail sales ex-auto/

home appliances have grown only 2-3% year-to-date. Following the consumptionrelated 15th Five-Year Plan released in mid-July, the government has announced

a category-specific framework, including the latest plan for smart home products,

without numbers and ‘how’. That said, we have yet to see any incremental stimulus

budget, and we do not include one in our base case.

Stock views. Against this backdrop, we believe consensus expectations for

sector earnings to rebound +21% in 2H26, versus -4% in 1H26, look overly

optimistic. Continued earnings downgrades are likely to remain an overhang

for share prices. We think it is still too early to trade a broad sector recovery,

and we remain focused on two groups: 1) category leaders and quality

compounders, including Midea, Anta, and Nongfu; and 2) higher-conviction

turnaround stories, including Luckin, Chagee, Mengniu and Haier.

Category details revealed a mixed picture. On a positive note, home

appliance sales turned positive (+2.3%) for the first time since Feb, good

…