--- title: "HSBC Wealth Insights: Q1 Macroeconomic Data Beats Expectations; Positioning for Industrial Resilience and Partial Price Improvement | China Viewpoint" type: "News" locale: "en" url: "https://longbridge.com/en/news/285832030.md" description: "Q1 macroeconomic data exceeded expectations, with GDP growing 5% year-on-year. Industrial production and trade remained robust, while the PPI turned positive for the first time. The profit margin of Chinese industrial enterprises rose to 15.5%. Despite strong industrial activity, consumer demand remained cautious, with total retail sales in March growing only 1.7% year-on-year. Policy support for domestic demand will be needed in the future to achieve a balanced economic recovery. We remain optimistic about A-shares, driven by upward revisions to earnings expectations, with the Materials and Information Technology sectors leading gains" datetime: "2026-05-10T07:01:18.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/285832030.md) - [en](https://longbridge.com/en/news/285832030.md) - [zh-HK](https://longbridge.com/zh-HK/news/285832030.md) --- # HSBC Wealth Insights: Q1 Macroeconomic Data Beats Expectations; Positioning for Industrial Resilience and Partial Price Improvement | China Viewpoint ## Q1 Macroeconomic Data Beats Expectations; Production Prices in Some Industrial Sectors Accelerate Upward Since the beginning of this year, the conflict between the US and Iran has impacted global energy markets, putting the global macroeconomy to a severe test. Although China cannot remain entirely unaffected amidst intense market volatility, its relatively low dependence on crude oil from the Gulf region, coupled with a power structure dominated by coal and renewable energy, has enabled its industrial base to calmly withstand the shocks thus far. Recent economic data generally corroborate the resilience of China's industry. In the first quarter, Gross Domestic Product (GDP) grew by 5% year-on-year, exceeding market expectations, while industrial production activities and trade remained broadly stable. The Producer Price Index (PPI) turned positive for the first time in 41 months. Benefiting from strong AI (Artificial Intelligence) demand and the impact of "anti-involution" policies, prices in sectors such as materials, industrial equipment, and semiconductors had already seen consecutive increases even before the current shock from imported energy prices, boosting the profit margins of industrial enterprises. Notably, the profit margin of Chinese industrial enterprises jumped to 15.5% in the first quarter of this year (compared to an expected year-on-year growth of only 0.8% for 2025). Despite the continued strength in industrial activity and exports, March data showed that consumer demand remained cautious. Total retail sales of consumer goods in March grew by only 1.7% year-on-year, slowing further from January-February, while consumer price (CPI) inflation remained mild. To achieve a balanced economic recovery in the coming quarters, the domestic demand sector will still require sustained policy support. **Benefiting from continuous "anti-involution" policies, China's Industrial Production Index experienced several months of month-on-month increases before the current oil price shock** Note: PPI refers to the Industrial Production Index. Data sources: Bloomberg Consensus Estimates, HSBC Global Investment Research, HSBC Qianhai Securities, HSBC Private Bank and Wealth Management, as of April 27, 2026 ## Stock Market: Optimistic on A-Shares Driven by Upward Earnings Revisions, Ample Liquidity, and Diversification Value The earnings season has provided investors with an opportunity to refocus on fundamentals amidst geopolitical noise. To date, more than half of A-share companies have released their 2025 financial reports, with the Materials sector (+41.6%) and the Information Technology sector (+33.8%) leading the gains. Looking ahead, the market continues to expect a structural recovery in A-share earnings: the general consensus is that A-share earnings will grow by 17.9% year-on-year in 2026. Since the beginning of this year, earnings expectations for the Materials, Energy, and Information Technology sectors have been revised upward the most. Our China equity strategy continues to adopt a barbell approach, prioritizing the Materials sector, which benefits from PPI normalization and government-led capital expenditure. We view the Technology sector as a medium-to-long-term structural theme. Given persistent geopolitical uncertainties and potential stagflation risks, high-quality dividend stocks can inject stability and resilience into our portfolios. **Upward Revisions to 2026 Consensus Earnings Expectations for Materials and Information Technology Sectors Lead the Market** Data sources: Wind, HSBC Qianhai Securities, as of April 24, 2026. Note: The above chart excludes data for the Real Estate sector (market consensus revised downward by 303.3%). ## Bond Market: Bull Flattening of the Curve Dominated by Liquidity Conditions Since April, the Chinese bond market has moved independently against the backdrop of repairing global risk appetite. Unlike the maturity divergence seen in March, the Chinese bond market in April overall presented a pattern of "stability at the short end and catch-up gains at the long end," with yields on interest rate bonds declining across the board. As of the close on April 24, the yield on 3-month treasury bonds was reported at 1.11%, while the yield on 10-year treasury bonds remained at 1.76%, with yields on ultra-long-end instruments under more significant pressure. Bond funds have seen continuous net subscriptions over the past three weeks, with institutions showing a markedly increased demand for duration allocation. We believe that the decline in interest rates in April was more of a corrective move following the earlier steepening of the curve. Economic data had limited disturbance on the market, with liquidity conditions and supply pace remaining the core pricing variables. Looking ahead, in the short term, liquidity conditions may face the dual test of tax period payments and the issuance of the first batch of ultra-long special sovereign bonds, potentially amplifying fluctuations in funding rates. In the medium term, the core support for the bond market still lies in the ample interbank liquidity pattern and the allocation demand brought about by the shift of deposits from banks to non-bank financial institutions. **April's Ultra-Long-End Performance May Be More About Catch-Up Gains** Data sources: Wind, HSBC Private Bank and Wealth Management, as of April 21, 2026. The China equity viewpoints in this article are from the HSBC Private Bank and Wealth Management Global Investment Committee. For more content, click \[HSBC China Wealth Insights Column\]. Risk Warning and Disclaimer Markets involve risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. 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