Goldman Sachs Group Inc. anticipates that Chinese stock benchmarks will continue their upward trajectory for another year, albeit at a more moderate pace compared to 2025, with corporate earnings bolstered by advancements in artificial intelligence and supportive government policies.

The MSCI China Index is projected to advance by 20%, reaching a level of 100 by the end of 2026 from its closing value in 2025, while the CSI 300 Index is expected to rise 12% to 5,200, according to a note from strategists, including Kinger Lau, released on Wednesday.

They stated, "Our projected equity gains for 2026 are almost entirely driven by earnings growth." This profit expansion is anticipated to be "underpinned by AI, the 'Going Global' strategy, and policies aimed at curbing involution."

The rally in Chinese equities has maintained strong momentum heading into the new year, and Goldman Sachs is among the prominent institutions sustaining a bullish outlook despite the substantial gains witnessed in 2025. This optimistic upgrade reflects confidence that earnings growth, policy support, and emerging economic drivers will continue to captivate investor interest.

So far in 2026, the CSI 300 has climbed 3.5%, reaching its highest point in four years. The MSCI China Index has gained approximately 3.6%, outperforming the S&P 500.

Investor enthusiasm was clearly visible in onshore market turnover, which increased on Tuesday to its highest level since mid-September. Furthermore, the outstanding balance of margin loans used by investors to purchase stocks remained near record highs.

The strategists projected that net southbound purchases of Hong Kong-listed shares by mainland Chinese investors will hit a new record of $200 billion. Concurrently, foreign investors are expected to reduce their underweight allocations to Chinese equities, potentially catalyzing $10 billion in inflows.

The strategists also revised their corporate profit growth forecast upward, now anticipating an acceleration to 14% in both 2026 and 2027, a significant increase from the 4% growth estimated for 2025.

Goldman Sachs has maintained a long-standing bullish stance on China, frequently countering prevailing market pessimism throughout the multi-year downturn. A year ago, its strategists forecasted a gain of approximately 20% for Chinese stocks in 2025.

In 2025, the MSCI China Index surged 28%, and the CSI 300 Index climbed 18%.