Leading global and domestic financial institutions express optimism about the medium- to long-term prospects of China's stock market, advocating an overweight position in equities within a diversified global asset allocation framework for 2026.

Key insights from top strategists and fund managers:

**A-Share and Offshore Chinese Equities Outlook** Morgan Stanley's China equity strategist Wang Yan maintains cautious optimism, noting balanced performance expectations between A-shares and offshore Chinese stocks due to liquidity support from southbound capital and global investor reallocation. Domestic reallocation from bonds and deposits to equities is still in early stages. A "barbell strategy" is recommended: overweight high-quality internet/tech leaders, AI/tech frontrunners, financials, and dividend stocks, alongside thematic opportunities aligned with China’s 15th Five-Year Plan.

Invesco’s senior fund manager Liu Hui highlights attractive valuations in Hong Kong and A-shares versus peers, with tech IPOs enhancing HK’s appeal. He favors China’s AI/robotics supply chain, power equipment exporters, and innovative pharma (selectively).

Standard Chartered’s CIO Wang Xinjie cites China assets’ low valuation, policy stability, and liquidity as tailwinds, preferring offshore tech, communications, and consumer discretionary sectors.

CSOP’s quant head Wang Yi emphasizes opportunities in both HK’s "soft tech" and A-share "hard tech."

**Market Drivers** Liu Hui identifies 2025’s valuation rebound and AI narrative transitioning to 2026’s earnings growth, fueled by globalization and anti-involution trends. Wang Xinjie underscores liquidity shifts from bonds (post-long bull market) and household savings (¥160tn+) as catalysts, though earnings delivery remains critical.

**Fed Rate Cut Expectations** Morgan Stanley anticipates three 25bps cuts in 2026 (Jan/Apr/Jun), targeting 3.0–3.25%, with a December 2025 cut possible if data weakens. Wang Xinjie sees a pause in December but rising Q1 2026 cut odds. CSOP suggests signaling cuts may outweigh immediate action.

**Gold Divergence** CSOP notes short-term headwinds (geopolitical easing, ETF outflows) but retains long-term hedging appeal. Morgan Stanley labels gold a "top pick" (target: $4,500/oz) amid macro uncertainty and central bank demand. Standard Chartered views it as a hedge against dollar weakness.

**Global Asset Allocation** Morgan Stanley advocates global equity overweight (US/Japan cyclicals, small-caps), favoring financials, industrials, and healthcare. Standard Chartered’s triad: 1. Dollar weakness supporting ex-US equities and mid-term USD bonds. 2. Policy-driven global equity overweight (US/Asia ex-Japan). 3. Gold/alternatives as tariff/inflation hedges.

CSOP sees AI and tech’s momentum continuing, with EM outperforming DM amid dollar depreciation.