What is the PMI and why does it matter for these stocks?

PMI (Purchasing Managers' Index) is an economic indicator that measures business activity in manufacturing and services sectors. In China, the manufacturing PMI has been contracting (below 50) while the non-manufacturing PMI is expanding (above 50). This divergence signals that China's economic growth is increasingly driven by services rather than factories, which is why companies in this stock group could benefit, as they focus on domestic services like e-commerce, entertainment, and travel.

Why focus on domestic consumption in China?

Domestic consumption in China represents a more stable growth opportunity than export-driven manufacturing, especially during global trade tensions. With a population of 1.4 billion people and a growing middle class, China's internal market offers enormous potential. The companies in this group primarily serve Chinese consumers, making them less vulnerable to international trade disputes while positioning them to benefit from increasing local spending on services and digital products.

What's the difference between China's manufacturing and services sectors?

China's manufacturing sector traditionally focused on producing goods for export, making it sensitive to global demand and trade relations. The services sector, however, primarily serves domestic needs through areas like retail, entertainment, travel, and financial services. As China's economy matures, services are becoming more important, now accounting for over 50% of GDP. This transition represents a structural economic shift that the companies in this group are positioned to benefit from.

What are "consumer-facing digital sectors"?

Consumer-facing digital sectors are online businesses that serve everyday consumers directly. In this stock group, these include e-commerce platforms like Alibaba and JD.com, digital entertainment companies like Bilibili and NetEase, and online travel services like Trip.com. These companies operate primarily through the internet and mobile apps, providing services directly to Chinese consumers rather than other businesses, and represent the growing digital service economy in China.

How might these stocks perform when China's manufacturing is weak?

These stocks might show resilience even when manufacturing data is weak because they primarily depend on domestic consumption rather than exports. While factories might produce less when foreign demand drops, Chinese consumers can continue spending on e-commerce, digital entertainment, and travel services. This separation between manufacturing and services is exactly why this stock group was created – to offer exposure to the more stable domestic consumption trend within China's evolving economy.

15 handpicked stocks

China's Services Sector Pivot

While China's manufacturing struggles with weak global demand, its domestic services sector is thriving. These carefully selected stocks represent companies positioned to capture growth from China's expanding consumer economy and digital services landscape.

Han Tan | Market Analyst

Published on June 30

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

Alibaba Group

BABA

Current price

$189.34

As a dominant force in e-commerce and cloud services, Alibaba is a primary beneficiary of China's domestic consumption and digital economy, which rema...

As a dominant force in e-commerce and cloud services, Alibaba is a primary beneficiary of China's domestic consumption and digital economy, which remains strong despite manufacturing weakness.

JD.com, Inc.

Current price

$35.98

A leading e-commerce platform with a robust logistics network, JD.com is well-positioned to capture growth from resilient domestic consumer spending.

PDD Holdings Inc

PDD

Current price

$135.24

This popular e-commerce platform targets a wide range of consumers within China, making it a key player in the domestic consumption story that is outp...

This popular e-commerce platform targets a wide range of consumers within China, making it a key player in the domestic consumption story that is outperforming manufacturing.

Trip.com Group Ltd.

TCOM

Current price

$75.18

Yum! China Holding, Inc.

YUMC

Current price

$42.80

Bilibili Inc.

BILI

Current price

$28.89

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+6.57%

≈

About This Group of Stocks

Our Expert Thinking

China's economy is showing a clear split: manufacturing is contracting while services are expanding. This represents a structural shift towards domestic consumption and digital services, creating targeted investment opportunities in companies serving China's internal market.

What You Need to Know

These companies are largely insulated from global trade tensions because they focus on China's domestic market. The basket includes market leaders in e-commerce, digital entertainment, online travel, and food service – areas showing resilience despite broader economic uncertainty.

Why These Stocks

We've selected established market leaders positioned to directly benefit from robust internal spending trends in China. Each company plays a significant role in the consumer-facing digital economy, capitalizing on the country's pivot toward services-led growth.

Group Performance Snapshot

6.57%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 6.57% over the next year.

15 of 15

Stocks Rated Buy by Analysts

15 of 15 assets in this group are rated Buy by professional analysts.

0.9%

Group Growth

This group averaged a 0.9% return last month.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🔄

Catch the Economy's Big Shift

China's manufacturing is slowing but services are booming. These companies are riding this pivotal economic transition, giving you exposure to where the real growth is happening.

🛡️

Trade War Protection

These domestic-focused companies are partially shielded from US-China trade tensions. While export manufacturers struggle, these services businesses continue serving China's massive internal market.

🧠

The Smart Money's Moving Here

Professional investors are increasingly targeting China's digital services sector as manufacturing cools. These companies represent the new growth engines in the world's second-largest economy.

Get the full story on this Basket. Read our detailed article on its risks and potential.

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