Both economic data and the stock market in China offer little cheer to investors still spooked by the events of the summer. But a visit to the portfolio companies of Citic Capital, a local private equity firm, suggests the gloom is overdone.

Citic Capital believes China is indeed making the desired shift to a more service-oriented, consumption-driven economy, a view that has become its principal investment theme today. That shift, though, does not appear in much of the data, which still focus on such measures as industrial production and deflation in producer prices. Moreover, since the whole point of the stock market from the beginning was to raise capital for (often profit-free) state-owned enterprises, the market itself is hardly a reflection of the state of the overall economy.

Consider, for example, the circumstances of the Chinese unit of King Koil Mattress, which Citic Capital bought in 2014. While it is not immediately obvious, a mattress company is a good indicator of consumption. A King Koil showroom on the outskirts of Shanghai displays mattresses that sell for up to Rmb970,000 ($160,000), with its best-selling models priced at Rmb16,000 and its lowest end mattress Rmb10,800.