Institutions clearly maintain a bullish stance. Goldman Sachs analysts expect the overall profit growth rate of A-shares and H-shares to reach 10% by 2026.

By Maoyi Rong, Reporter

In recent days, although volatility in global financial markets has increased, Chinese assets are showing unique resilience and allocation value. Multiple institutions believe that, thanks to China’s diversified energy structure, a complete industrial system, a stable socio-economic environment, and ongoing deepening of capital market reforms, the allocation value of Chinese assets amid global volatility is becoming increasingly prominent. The solid foundation for A shares to perform well over the long term remains firm, and structural opportunities are accelerating.

Looking globally, multiple international institutions, including Goldman Sachs and UBS, have already clearly stated a bullish stance. Liu Jinqin, Goldman Sachs’ Chief China Equity Strategy Analyst, said in a new view released on March 31 that it will continue its strategy of increasing holdings of A shares and H shares. Benefiting from Chinese companies’ ongoing efforts to improve return on net assets for shareholders, cash return rates, and gains per share in A shares, it is expected that overall profit growth rates for the A-share and H-share markets in 2026 may reach 10%. This expectation is supported by factors including artificial intelligence, “going global,” and “anti-involution” policy measures.

Fundamentals bolster confidence

Against the backdrop of widespread pressure on global risk assets in recent times, China’s stock market has seen positive changes in fund flows. Zhang Yu, Chief Economist at Huachuang Securities, said that recently, amid widespread sell-offs of global risk assets, Chinese stock funds, however, generated $690 million in net inflows against the trend in a single week (from March 19 to March 25, the same below), with foreign capital and passive funds becoming the main backstopping forces. Overseas funds recorded a sharp net inflow of $1.38 billion in that single week; together with the return of $980 million from passive funds, this jointly formed the micro-level fund-flow structure in China’s stock-fund market and created the backstopping force. This phenomenon indicates that Chinese assets are continuously entering global investors’ allocation view.

Fang Yi, Chief Strategy Analyst at CICC Haitong Securities, believes that stability is the underlying tone of China’s economy and stock market. China has the world’s most complete industrial system, with manufacturing value added accounting for roughly 30% of the global share. The manufacturing system of “a full industrial chain + efficient logistics + controllable costs” is upgrading from merely a “low-cost ground” into a “stability anchor” in the global supply chain. Through successive global risk events and demand shocks, China’s manufacturing industry has repeatedly demonstrated strong resilience.

In addition, the improvement of China’s distinctive stock-market stabilizing mechanism enhances the market’s ability to withstand risks. Combined with the risk-diversification value brought by the low correlation between Chinese assets and global assets, it is expected to attract global capital. “During our recent communications with long-term overseas capital, we learned that foreign investors are re-examining China’s rise and industrial advantages,” Fang Yi said.

Yang Chao, Chief Strategy Analyst at Galaxy Securities, told reporters from The Securities Daily that, in the opening year of the “15th Five-Year” and “five-year” reform initiatives, measures have been rolled out steadily. A resonance has formed between household wealth shifting and long-term capital entering the market, and the improvement in supply of mid-to-long-term funds has a high degree of certainty. With A-share companies’ 2025 annual reports and 2026 first-quarter reports being released in a concentrated manner, sectors with high earnings certainty and continued improvement in business conditions will become the core direction that capital focuses on. Data show that from January to February 2026, the profits of industrial enterprises above a designated size nationwide grew 15.2%. Structurally, profit growth in upstream and midstream raw materials and AI hardware manufacturing is relatively more pronounced. The earnings growth center for emerging technologies is expected to move higher further.

“The basic fundamentals of Chinese enterprises are showing a continued trend of improvement. Export structures are being upgraded steadily, and companies in high value-added fields are demonstrating clear growth momentum. Chinese companies are accelerating their move toward the world, and overseas revenue is expected to become a new engine for earnings growth.” Li Changfeng, Head of Market Strategy at ABF (AllianceBernstein) Funds, said in an interview with reporters from The Securities Daily.

AI and energy transition become the main lines

Multiple institutions generally believe that China’s economic transition and positive industrial progress are the fundamental drivers behind the sustained, steady development of China’s stock market. Among them, artificial intelligence and the energy transition are the two core main lines, and structural opportunities in related areas are accelerating.

From the perspective of valuation and cost-effectiveness, high-quality technology assets already have strong appeal for allocation. UBS Wealth Management’s investment management director’s office released a recent view stating that the market adjustment may have already gone too far, giving investors an opportunity to add to high-quality China AI-related stocks at lower valuations. China’s internet industry’s 12-month forward P/E ratio is currently about 13 times, which is close to the level before DeepSeek was released. The current valuation has not yet fully reflected the returns brought by AI investment and monetization over the past year. It is expected that MSCI China Index EPS (earnings per share) growth this year will be about 13%, and that earnings growth in the technology sector could reach 20% to 25%. At the same time, policy continues to support AI development and technological innovation. As fundamentals keep improving, earnings, valuations, and positioning are also expected to gradually recover.

In the long run, the re-rating of valuations for Chinese assets has also become an important positive factor. “The logic of re-rating Chinese assets driven by capital market reforms has not changed as the basis for long-term development in this cycle,” Xia Fanjiang, an investment strategy analyst at CICC (China International Capital Corporation) Securities, said.

In Liu Chenming’s view, Chief Strategy Analyst at Guangfa Securities, policy signals from regulators that are multi-dimensional and sustained are forming a synergy. For example, on March 18, the Party Committee of the People’s Bank of China convened an expanded meeting to further stress “resolutely safeguarding the steady operation of financial markets such as stocks, bonds, and foreign exchange.” Chinese assets’ structural advantages and policy support still have resilience. A valuation safety cushion provides bottom protection; industrial upgrading and policy dividends provide upward driving force; and in the global re-allocation of assets, the safety advantage stands out.

Goldman Sachs believes that artificial intelligence will continue to be the leading theme in China’s stock market. In particular, globally, China has competitive advantages in areas including power, infrastructure, and artificial intelligence, as well as supply chains related to national security and large language model fields. After adjustment, A shares and H shares are likely to perform steadily, providing investors with a unique risk-diversification value.

Li Changfeng also mentioned that whether they are the “shovel sellers” of AI infrastructure or the “users” of AI applications, Chinese companies are actively laying out plans. China’s relatively stable power infrastructure construction provides a good development space for the AI industry ecosystem, and demand for Chinese AI tokens is surging dramatically.

In fact, with a complete supply-chain system, a stable macro environment, and ongoing structural reforms, Chinese assets are gradually becoming an important direction for global capital seeking certainty. Zhang Jundong, a macro analyst in the research department of CICC, said that in the future, the safety attributes of Chinese assets will gain even more global capital favor.

(Editor: Wenjing)

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