China's young consumers are spending big — and 3 stocks could be winners

Shoppers at a duty-free shop in Haikou, China's Hainan province on June 28, 2020.
Luo Yunfei | China News Service | Getty Images

Millennials will fuel China's consumption growth in the coming years and their spending habits will determine which consumer stocks could be winners, said Japanese investment bank Daiwa.

The bank identified three stocks that could ride on this trend, and has a target price for one that's close to 40% higher than its latest closing price.

Consumer spending in China is forecast to grow by an average of 5% annually from 2020 to 2025, Daiwa said in a Monday report.

Millennials — or those from 24 to 39 years old — make up around 30% of China's population and will be major drivers of that growth, the bank said.

"Given this collective spending power, it is imperative to understand millennials' consumption and lifestyle preferences in order to identify the potential winners in the consumer discretionary space over the next decade," said the report.