Global Times | Another positive year ahead for Chinese equities: analyst says on capital market outlook
Multiple foreign financial institutions are turning more bullish on the outlook of Chinese assets in 2026, driven by the country's sustained innovation breakthroughs and positive signals about the high-quality development of China's economy during the 15th Five-Year Plan period (2026-30).
"We expect another positive year ahead for Chinese equities," James Wang, head of China Strategy at UBS Investment Bank Research, wrote in a note sent to the Global Times on Wednesday, commenting on the 2026 China equity outlook.
Many of the favorable drivers from this year are expected to continue to support the market, including advancements in innovation, in particular artificial intelligence (AI), accommodative policies for private enterprises and capital markets, sustained fiscal expansion and ample liquidity under an easy monetary policy setting, as well as potential inflows from domestic and foreign institutional investors, according to Wang.
"Our 2026 year-end target for the MSCI China is 100, implying 14 percent upside from here," Wang noted, with regard to investment opportunities in sectors including the internet, hardware and the brokerage industry.
Laura Wang, equity strategist at Morgan Stanley, wrote in a note sent to the Global Times that the MSCI China and Hang Seng indices have both risen more than 30 percent year-to-date, making China one of the best-performing major equity markets in 2025, reflecting structural improvements.
"We expect 2026 to strive for stabilization and sustainability before clearing a path for a further significant positive breakthrough, while dealing with several domestic and external moving factors," she noted.
According to UBS, foreign institutional investors have further increased their holdings of Chinese equities this year. The world's top 40 institutional investors' holdings of Chinese equities have risen to the highest level since the first quarter of 2023. Meanwhile, some global funds have started to invest in Chinese stocks, with signs of capital inflows, it said.
Offshore inflows into China stocks from January to October this year totaled $50.6 billion, up from $11.4 billion in 2024, the Financial Times reported on Sunday, citing data from the Institute of International Finance, a trade body for the global banking industry.
Behind these positive projections and capital inflows are foreign financial institutions' in-depth research on Chinese assets. According to industry information data provider Wind, foreign financial institutions including Goldman Sachs, Citigroup Global Markets and Morgan Stanley conducted about 1,000 research visits to Chinese A-share listed companies from October 1 to November 11, the Securities Times reported.
"Global investors' increasing interest in Chinese assets reflects not only the attractiveness of Chinese firms, especially high-tech firms, but also underscores their confidence in China's economic prospects," Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Wednesday.
The 15th Five-Year Plan period starts next year. Along with continuous advancements toward "achieving greater self-reliance and strength in science and technology" and "steering the development of new quality productive forces," China's economy will continue to see stable growth and the capital market will offer more opportunities, according to Yang.
"Looking at the overall picture, our economy is on solid foundations, demonstrating advantages in many areas, strong resilience, and great potential," Fu Linghui, a spokesperson of the National Bureau of Statistics, said at a press conference on Friday on the release of major macroeconomic data.
There are many supporting factors for economic development, he said, calling for efforts to expand domestic demand, keep employment, businesses, markets and expectations stable, effectively implement macroeconomic policies, and strengthen innovation-driven development in a bid to promote improvements in both the quality and quantity of the economy.
"We forecast Chinese export volumes to grow by 5-6 percent annually, gaining global market share and driving overall economic expansion in the next few years. For 2025, we are increasing our real GDP growth forecast from 4.9 percent to 5.0 percent," a Goldman Sachs note said.