Amid global market uncertainties, top-tier foreign banks including UBS, JPMorgan, and Morgan Stanley are unanimously expressing confidence in China's stock market for 2026.
JPMorgan maintains a constructive view on China's A-share market, anticipating structural upside driven by "anti-involution" policies, AI advancements, improving global macro conditions, and a bifurcated consumption recovery. The bank sets a baseline target of 5,200 for the CSI 300 Index by end-2026, with a bull-case scenario projecting 6,010.
UBS forecasts A-shares to "reach new heights" in 2026, fueled by accelerating earnings and valuation re-rating. It expects overall A-share earnings growth to rise from 6% in 2025 to 8%, highlighting that China's equity risk premium (ERP) remains well above historical averages, offering relative attractiveness. UBS notes Chinese internet platforms' first-mover advantage in AI monetization and exceptionally cheap valuations as a rare entry opportunity.
Morgan Stanley views 2026 as a "year of stability" following 2025’s high returns, with limited index upside, moderate earnings growth, and valuations normalizing at higher levels. It cites China’s regained footing in global tech competition and easing trade tensions as stabilizing factors.
**JPMorgan’s 2026 A-Share Outlook: CSI 300 Target at 5,200, Four Key Themes** In its 26 November report, JPMorgan’s 5,200 target implies ~17% upside, based on a 15.9x forward P/E (Wind consensus). Bull and bear scenarios project 6,000 and 4,000, respectively. The bank outlines four drivers: 1. **"Anti-involution" Policy Implementation**: Accelerated execution could shift industries from price/scale competition to quality focus, structurally boosting CSI 300 net margins and ROE. 2. **AI Infrastructure & Monetization**: Global AI capex growth benefits Chinese suppliers, with localization and commercialization creating more winners. 3. **Improved Global Macro**: Expected policy easing in developed markets supports overseas sales, especially for export-heavy firms. 4. **K-Shaped Consumption Recovery**: Opportunities in both budget and luxury segments.
**UBS: Earnings and Valuation Dual Recovery** UBS emphasizes Chinese tech’s valuation edge and unique AI monetization potential. Its report highlights Chinese internet platforms’ early AI monetization capabilities and "exceptionally cheap" valuations. Generative AI’s productivity gains are seen as a catalyst for a "rational" global equity bubble, with China as a key beneficiary. The bank prioritizes "tech self-reliance," noting accelerated domestic substitution in semiconductors and robotics.
On valuations, UBS underscores A-shares’ ERP remains elevated versus history, while the U.S. and other EMs have seen ERPs revert below long-term averages—implying richer risk compensation in China.
**Capital Flow Shifts: Household Savings and Long-Term Funds** UBS notes structural shifts in China’s capital "reservoir": - As property adjusts and deposit rates decline, household wealth is pivoting toward equities. Despite a 2025 H2 dip, the household deposit-to-market-cap ratio stays above historical averages, signaling untapped potential. - Long-term capital inflows are accelerating, with insurance funds’ equity/ETF holdings up RMB 1.5 trillion YTD by Q3 2025. Reforms to enhance listed firms’ quality—including record-high 2025 cash dividends (potentially exceeding RMB 2 trillion) and buybacks—are boosting appeal to long-term investors.