Tobacco and alcohol retail sales surged 19.1% year-over-year! Liquor stocks collectively erupted, Huabao Fund food and beverage ETF rose 1.77%

How can the explosion of AI and Baijiu stocks drive sector valuation recovery?

The consumer staples sector surged today (March 16), reflected by the overall trend of the Food & Beverage ETF Huabao (515710), which opened sharply higher. During trading, the intraday price increased by up to 1.77%, then continued to fluctuate in red, closing up 1.42%.

In terms of constituent stocks, leading Baijiu companies broadly strengthened. By the close, Kweichow Moutai surged 3.29%, Wuliangye, Shanxi Fenjiu, Luzhou Laojiao, Yanghe Shares, and others all gained; some popular brands also performed well, with Dongpeng Beverage soaring 5.17%, Tianwei Food, Lianhua Holdings, Haitian Flavouring and others also showing notable gains.

On the news front, retail sales of tobacco and alcohol exceeded expectations in January-February: nationwide retail sales of tobacco and alcohol in January-February 2026 grew by 19.1% year-on-year (compared to 5.5% in January-February 2025). Considering the offsetting effects of the Spring Festival, retail sales from December 2025 to February 2026 increased by 10.4% year-on-year, outperforming expectations. Some analysts suggest that this outperformance may be attributed to strong Spring Festival performance by Moutai.

Xiangcai Securities pointed out that after long-term adjustments, valuation pricing of the food and beverage sector relative to pessimistic expectations is relatively sufficient, with moderate inflation recovery. As market styles shift, investment opportunities in the consumer sector are gradually emerging, and it is recommended to focus on the bottom-up recovery opportunities and valuation repair potential after the release of fundamental pressures.

From a valuation perspective, the food and beverage sector remains at a low valuation level. Data shows that as of the previous trading day (March 13), the Food & Beverage ETF Huabao (515710) tracking the CSI Sub-Industry Index had a P/E ratio of 19.59x, which is at the 2.94% percentile of the past 10 years, highlighting its long-term cost-effectiveness for medium- and long-term allocation.

Looking ahead, Guojin Securities states that the current valuation of the Baijiu sector is promising. With low expectations, the win rate is considerable, especially during periods when external risks cause market sentiment fluctuations. The sector is expected to be catalyzed from the top down even during off-peak seasons after the holiday. As policies against “internal competition” continue to be implemented, companies’ ROE is expected to improve, which will translate into increased corporate hospitality and other expenses, along with improved residents’ income expectations. An industry turning point is gradually approaching.

Investors can easily allocate core assets in the food and beverage sector, focusing on the Food & Beverage ETF Huabao (515710). According to the China Securities Index Company, this ETF tracks the CSI Sub-Industry Food & Beverage Industry Theme Index, with nearly 60% of holdings in leading Baijiu companies. The top ten holdings include “Moutai, Wuliangye, Fenjiu, Yanghe,” as well as Yili, Haitan Flavouring, and others. Off-market investors can also consider deploying core assets in the Food & Beverage ETF Huabao Connect Funds (A-shares 012548 / C-shares 012549).

Note: When subscribing or redeeming fund shares, authorized brokers may charge a commission of up to 0.5%, which includes fees charged by stock exchanges, registrars, and other related costs. For detailed fee information, please refer to the fund’s legal documents.

Source: Shanghai and Shenzhen Stock Exchanges, etc., as of March 16, 2026. Reminder: Recent market volatility may be significant; short-term fluctuations do not predict future performance. Investors should make rational investment decisions based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.

Institutional views: ① Xiangcai Securities March 15, 2026, research report “Gradual Deepening of Baijiu Adjustment, Continued Monitoring of Recovery in Prosperity”; ② Guojin Securities March 14, 2026, industry research report “Implementation of Moutai’s Agency Planning, Rational View on Upstream Cost Transmission.”

Risk warning: The Food & Beverage ETF Huabao passively tracks the CSI Sub-Industry Food & Beverage Industry Theme Index, which was launched on December 31, 2004, and published on April 11, 2012. The index’s constituent stocks are adjusted periodically according to the index rules; backtested performance does not predict future results. The stocks mentioned are only objective examples of the index components and do not constitute stock recommendations or reflect the fund manager’s or fund’s investment direction. All information (including but not limited to stocks, comments, forecasts, charts, indicators, theories, or any other forms) mentioned herein is for reference only. Investors are responsible for their own investment decisions. Furthermore, any opinions, analyses, or forecasts in this document do not constitute investment advice and do not guarantee any direct or indirect losses resulting from the use of this content. Investors should carefully read the “Fund Contract,” “Prospectus,” “Fund Product Information Summary,” and other legal documents to understand the fund’s risk-return characteristics and choose products suitable for their risk profile. Past performance does not indicate future results; the performance of other funds managed by the fund manager does not guarantee the performance of this fund. According to the fund manager’s assessment, the risk level of the Food & Beverage ETF Huabao is R3—medium risk, suitable for balanced (C3) and above investors. Suitability opinions are subject to the sales institution’s judgment. Sales institutions (including the fund’s direct sales channels and other sales agencies) are required to evaluate the fund’s risk according to relevant laws and regulations. Investors should pay attention to the suitability opinions issued by the fund manager; different sales agencies may have differing opinions, and the risk level assessments provided by sales agencies should not be lower than those of the fund manager. The fund’s risk-return profile may differ due to different considerations in the fund contract. Investors should understand the fund’s risk and return, consider their own investment goals, time horizon, experience, and risk tolerance, and choose funds carefully, bearing the risks themselves. The China Securities Regulatory Commission’s registration of the fund does not imply any judgment or guarantee of its investment value, market prospects, or returns. Investment in funds should be cautious.