Nov. 13 (Bloomberg) -- China’s consumer-related stocks may rise as the government extends measures to boost domestic spending, BNP Paribas SA’s Chinese fund-management venture said.

The government cut taxes and introduced subsidies for purchases from cars to home appliances to boost domestic demand as the global recession cut exports. Retail sales gained an annual 16.2 percent in October, the most since December excluding seasonal distortions in January and February, the statistics bureau said this week, while outbound shipments slumped 13.8 percent.

“Domestic consumption is a very important growth engine, Wei Li, a fund manager at Shanghai-based SYWG BNP Paribas Asset Management Co., said in a telephone interview yesterday. “With external demand still relatively weak, the government will probably extend measures to encourage spending next year.”

Wei said he favors automakers, home-appliance manufacturers and high-end liquor producers, without naming any specific stocks.

China will take “vigorous” steps to boost domestic demand and reduce reliance on investment and exports for economic growth, President Hu Jintao said today in Singapore, where he is attending the Asia-Pacific Economic Cooperation group summit.

“We have been working hard to improve the consumption environment,” Hu said. We want to “increase people’s ability to spend and foster new areas of consumer demand,” he said.

SAIC Motor

An index tracking consumer discretionary stocks on the CSI 300 Index has rallied 123 percent this year, the most among 10 industry groups, according to data compiled by Bloomberg. SAIC Motor Corp., the nation’s largest automaker, has more than quadrupled this year and is the best performer on the industry gauge as it posted a ninefold increase in third-quarter profit.

Companies on the CSI 300 may report earnings growth of 25 percent next year, according to SYWG BNP Paribas. The index trades at 28.73 times reported earnings, more than double last year’s November low, Bloomberg data shows.

Set up in 2004, SYWG BNP Paribas now has eight open-end funds under management with 12.2 billion yuan ($1.79 billion) in total assets, according to its Web site. The asset management unit of BNP Paribas has a one-third stake in the venture and Shenyin & Wanguo Securities Co. owns the remainder.

--Zhang Shidong. Editors: Richard Frost, Reinie Booysen

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net

Last Updated: November 13, 2009 04:27 EST