Several top global financial institutions have recently issued optimistic outlooks, suggesting that Chinese stock markets still possess upside potential in 2026. Institutions such as Goldman Sachs, UBS, Fidelity International, and Morgan Stanley unanimously agree that improvements in corporate earnings will be the key driver in the coming year, while artificial intelligence, policy support, and attractive valuations form the main pillars of market confidence.
Goldman Sachs strategists explicitly stated that returns from Chinese stocks in 2026 will primarily stem from improvements in corporate earnings. Supported by advancements in artificial intelligence technology, enterprises’ overseas expansion, and “anti-involution” policies, earnings growth is expected to accelerate significantly from 4% in 2025 to around 14% in 2026–2027. The bank forecasts that the MSCI China Index may reach 100 points by the end of 2026, marking a 20% increase from the end of 2025, while the CSI 300 Index is projected to rise by 12% to 5,200 points. The market has already shown a strong start in 2026, with the CSI 300 Index rising by 3.5% year-to-date to its highest level in four years, and the MSCI China Index gaining 3.4%, outperforming the S&P 500 Index.
Institutions generally agree that, aside from earnings fundamentals, multiple structural factors underpin the optimistic outlook. First, artificial intelligence is seen as a key growth driver. UBS noted that China’s new AI models demonstrate technological leadership, while policy support enhances the resilience of the ecosystem. Both Goldman Sachs and UBS expressed confidence in investment opportunities related to AI themes. Second, valuations remain attractive. UBS analysis indicates that despite strong performance in 2025, Chinese stock valuations are still lower than their global peers and historical highs, leaving room for upward revisions. Third, sustained policy support is creating structural investment opportunities. Fidelity International believes that “anti-involution” policies are expected to drive corporate earnings back to substantive growth.
Improvements in capital flows and market structure have also bolstered institutional confidence. Goldman Sachs expects net inflows from southbound capital to potentially reach a record high of $200 billion in 2026. Morgan Stanley pointed out that China’s equity market is undergoing structural improvements, including enhanced shareholder returns, clear support for the private economy, and the emergence of globally competitive leaders in fields such as AI and smart manufacturing. The institution anticipates more foreign capital returning to the Chinese market in 2026.
In terms of sector allocation, Goldman Sachs remains optimistic about artificial intelligence, favors service-oriented consumption within the consumer sector, focuses on the materials industry in the cyclical sector, and maintains an overweight view on the insurance sector. Overall, the consensus among foreign institutions is that Chinese stock markets are transitioning from the valuation recovery of 2025 to a sustainable development phase driven by earnings growth, technological advancements, and policy optimization.
