UBS: Improved fundamentals combined with valuation advantages, Chinese stock markets still have further upside potential

UBS China Equity Strategy Research Head Wang Zonghao released China’s stock strategy on April 27, believing that the fundamentals are improving and that China is less affected by energy shocks, which could lead to the Chinese market outperforming other regions in the short term. Wang Zonghao stated that valuation and capital inflows provide further room for the Chinese stock market to rise. As the US and some Asian markets have recently risen, the MSCI China Index valuation has once again become attractive. Over the next two months, UBS expects both A-shares and H-shares to have potential upside, but for different reasons. A-shares may benefit more from steady profit growth in industrial companies, while H-shares (especially the Hang Seng Tech Index) may be catalyzed by factors such as reduced price competition in food delivery and the launch of new AI models by DeepSeek. Given the rise in global energy and commodity prices caused by Middle East conflicts, there are still certain inflationary challenges in the global markets, but China’s position may be relatively more favorable. Compared to other regions, China has sufficient strategic petroleum reserves, a relatively lower proportion of oil and gas in energy consumption and electricity generation structures, and higher penetration of renewable energy and electric vehicles, so Chinese companies may be less affected. UBS continues to recommend investors maintain a balanced portfolio, with the most favored sectors including AI hardware technology, power equipment, and non-ferrous metals. (Cailian Press)