Foreign Investment Giants Raise Forecasts, China Stocks “Overweight,” Technology And Consumption As Key Focus

At Present, Several International Institutions Are Growing More Optimistic About The Outlook For Chinese Equities In 2026. On December 1, UBS Securities China Equity Strategist Meng Lei Indicated That The A-Share Market Is Poised To Advance Further Next Year, With Overall A-Share Earnings Growth Projected To Increase From This Year’s 6% To 8%.

Earlier, Morgan Stanley Remarked That, With Moderate Earnings Growth And Valuations Stabilizing At Higher Levels, China Has Consolidated Its Position In The Global Technology Race, Leaving Relevant Indices With A Relatively Temperate Upside. JPMorgan Subsequently Upgraded Its Rating On Chinese Equities To “Overweight.”

From A Capital Flow Perspective, Data From The Institute Of International Finance Showed That In The First Ten Months Of 2025, Foreign Inflows Into China’s Stock Market Reached USD 50.6 Billion, Far Surpassing The Full-Year USD 11.4 Billion Recorded In 2024. According To The Latest Figures From Shenwan Hongyuan Strategy, As Of November 26, 2025, Both Domestic And Foreign Capital Recorded Significant Weekly Inflows Into China’s Equity Market.

On December 1, UBS Securities China Equity Strategist Meng Lei Shared His China Equity Strategy View, Reiterating That Overall A-Share Earnings Growth In 2026 Is Expected To Rise From This Year’s 6% To 8%.

Meng Lei Anticipates That Faster Nominal GDP Growth And A Narrowing Decline In PPI Will Support Corporate Revenue Expansion. In Addition, The Introduction Of Supportive Policies And The Ongoing Drive Against “Involution” Should Aid Profit Margin Recovery, Lifting Overall A-Share Earnings Growth From 6% This Year To 8% In 2026.

He Noted That, Over The Medium Term, Incremental Macro Policies, Accelerating Earnings Growth, Lower Risk-Free Interest Rates, Continued Migration Of Household Savings Into Equities, Persistent Net Inflows Of Long-Term Capital, And Reforms In Market Value Management Are Likely To Work In Tandem To Push A-Share Valuations Higher.

He Also Pointed Out That Recent Weakness In The A-Share Market Was Largely A Function Of Short-Term Factors, Including A Pullback In The Global Technology Sector From Peak Levels, Crowded Positions In Tech-Related Themes Among A-Share Investors By The End Of The Third Quarter, And Year-End Profit-Taking. These Temporary Disturbances, However, Do Not Alter The Medium-Term Trajectory Of Valuation Improvement.

UBS’s Global Strategy Team Believes Global Technology Stocks Could Climb Further In 2026. Moreover, The Trading Share Of Large-Cap Tech Names Has Fallen Below This Year’s Average, While Financing Activity Has Eased, Suggesting Reduced Concerns Over Positioning Crowdedness Within The Tech Segment.

Further, Meng Lei Highlighted Investment Themes Worth Watching In 2026: Technological Self-Reliance; A Gradual Pick-Up In Corporate Earnings Likely Supporting Household Income And Sales Expenses Throughout The Year, With Consumer Opportunities In The Second Half; Select Sectors Benefiting From The Continued Advancement Of “Anti-Involution”; And Chinese Companies Expanding Overseas With Improving Global Competitiveness.

In Terms Of Style, He Views The Medium-Term Backdrop As Favorable For Growth To Outperform Value. As The “Anti-Involution” Push Narrows PPI Declines And Industrial Enterprise Profits Accelerate, Cyclical Sectors May Outperform Defensive Ones.

Regarding Market Capitalization, Meng Lei Suggested A Relatively Balanced Setup Between Large And Small Caps In 2026. With A Low Probability Of A Sharp Jump In Turnover, Small Caps May Find It Difficult To Garner Extra Liquidity Support, While The Rapid Development Of ETFs Favors Large-Cap Industry Leaders. Sector-Wise, He Is Tactically Constructive On Industries Benefiting From China’s Innovation Momentum, Ample Liquidity, And A Narrowing PPI Decline.

According To The Institute Of International Finance, Foreign Inflows Into China’s Equity Market Reached USD 50.6 Billion In The First Ten Months Of 2025, Far Above The USD 11.4 Billion Logged For All Of 2024, Marking An Increase Of More Than Threefold.

Wang Ying, Morgan Stanley China’s Chief Equity Strategist, Stated In A Recent Report: “During Recent Strategy Roadshows And Major Client Events, We Have Consistently Received Positive Feedback From Foreign Investors Regarding China’s Stock Market. This Reinforces Our View That Global Investors Are Gradually Returning To The China Market, With Continued Net Inflows Expected Over The Next Year.”

Based On Shenwan Hongyuan Strategy’s Latest Data, As Of November 26, 2025, Both Domestic And Foreign Capital Experienced Strong Weekly Inflows Into China’s Stock Market. Overseas Active Funds Registered Inflows Of USD 0.36 Billion, While Overseas Passive Funds Saw Inflows Of USD 2.221 Billion. Overall, Foreign Capital Inflows Totaled USD 2.257 Billion, And Domestic Capital Inflows Reached USD 3.041 Billion.

Looking Ahead, Industry Observers Generally Expect That As China’s Economy Continues To Recover And Innovation Momentum Strengthens, Foreign Investors Will Likely Sustain Their Overweighting Of Chinese Technology Stocks, With The Technology Sector Emerging As A Key Driver Of The Market.

Morgan Stanley Recently Raised Its Target For China’s Equity Indices, Setting A December 2026 Objective Of 4,840 Points For The CSI 300 Index. The Firm Maintains That, With Moderate Earnings Growth And Valuations Stabilizing At Higher Levels, China Has Firmed Its Position In The Global Technology Competition, Leaving Related Indices With A Measured Upside. Morgan Stanley Recommends “Overweight” Positions In High-Quality Internet And Technology Leaders, Which Stand To Benefit From The Digital Economy And Industrial Upgrading Dividends.

JPMorgan Also Upgraded Its Rating On Chinese Equities To “Overweight,” Arguing That The Probability Of Significant Gains Next Year Outweighs Potential Downside Risks. It Views The Recent Market Pullback As An Attractive Entry Point And Expects A Stronger Performance Next Year, Driven By AI Adoption, Consumption Stimulus, And Governance Reforms.