Li Xunlei: bull market boosting consumption is bearly grounded

Core Viewpoint - The belief that a rising stock market can stimulate consumption and boost domestic demand is critiqued, emphasizing that wealth inequality and the predominance of real estate over equities in household wealth undermine this notion [1][2][3][57]. Group 1: Wealth Inequality in the Stock Market - 80% of retail investors on the Shanghai Stock Exchange control only 3.2% of its total value, while the top 3% hold over 60% of the wealth [2][9]. - The wealth distribution among retail investors mirrors that of the broader household sector, with the top 20% of households accounting for 46% of total disposable income [10][12]. Group 2: Impact of Stock Market on Consumption - Li Xunlei argues that rising stock prices are unlikely to affect most households, as their wealth is primarily tied to real estate rather than equities [2][3]. - The article presents data showing no significant correlation between stock market fluctuations and total retail sales of consumer goods, suggesting that consumption is not driven by stock market performance [31][24]. Group 3: Structure of Household Assets - The proportion of equity assets in Chinese households is low, with stocks constituting less than 2% of total assets, indicating limited impact from stock market changes on household wealth [16][19]. - The average total asset value of urban households is 3.179 million yuan, with physical assets dominating at 80% [16]. Group 4: Economic Context and Policy Implications - The decline in the real estate market has a more significant impact on consumption than stock market fluctuations, as real estate constitutes a larger share of household assets [36][57]. - Long-term measures, such as increasing fiscal spending and advancing tax reforms, are necessary to raise income levels among low- and middle-income groups, rather than relying on stock market performance to stimulate consumption [3][57].