China Stocks Poised for Another Year of Growth in 2026, Goldman Sachs Forecasts

Goldman Sachs Group Inc. expects Chinese equity benchmarks to extend their upward trajectory into 2026, albeit at a more moderate rate than in 2025, with corporate earnings underpinned by advances in artificial intelligence and continued policy support.

Strategists led by Kinger Lau indicated in a note released on Wednesday that the MSCI China Index is projected to rise 20% to reach 100 by the end of 2026, compared with its close in 2025. Over the same period, the CSI 300 Index is anticipated to increase 12% to around 5,200. According to the firm, the anticipated gains next year will be driven almost entirely by earnings growth, supported by the development of AI, the expansion of Chinese companies overseas, and measures aimed at curbing excessive competition.

China’s stock market rally has maintained strong momentum into the new year, and Goldman Sachs aligns with other major institutions in sustaining a constructive view despite the substantial advances recorded in 2025. The revised outlook reflects confidence that profit expansion, supportive policy initiatives, and emerging growth engines will continue to attract investor participation.

So far in 2026, the CSI 300 Index has risen 3.5% to its highest level in four years, while the MSCI China Index has gained approximately 3.6%, outperforming the S&P 500. Investor sentiment has been reinforced by robust trading activity onshore, with turnover climbing to its highest level since mid-September, while margin financing balances have remained near record highs.

The strategists also noted that net southbound purchases by mainland investors of Hong Kong-listed shares are expected to reach USD 200 billion, marking another record. At the same time, foreign investors are forecast to reduce their underweight exposure to Chinese equities, potentially generating USD 10 billion in inflows. Goldman Sachs has raised its corporate earnings outlook accordingly, now projecting profit growth to accelerate to 14% in both 2026 and 2027, up from 4% in 2025.

The firm has consistently maintained a bullish stance on China, often diverging from prevailing market skepticism during the prolonged downturn in recent years. One year ago, its strategists had anticipated an approximately 20% rise in Chinese equities in 2025, a forecast that was exceeded as the MSCI China Index advanced 28% and the CSI 300 gained 18% during the year.

Elsewhere in Asia, equity markets were mixed on Wednesday, easing from the enthusiasm generated by recent record highs on Wall Street as investors shifted focus toward global interest rate trends and geopolitical uncertainty surrounding developments in Venezuela. Japan’s Nikkei 225 fell 1.1% to close at 51,961.98, while South Korea’s Kospi rose 0.6% to 4,551.06, following record closes the previous session. Australia’s S&P/ASX 200 edged up 0.2% to 8,695.60.

Hong Kong’s Hang Seng Index declined 1.1% to 26,419.05, while the Shanghai Composite added less than 0.1% to 4,085.77. By contrast, US equities continued to post fresh records, led once again by large technology stocks. The S&P 500 advanced 0.6% to 6,944.82 on the third trading day of the year, the Dow Jones Industrial Average rose 1% to 49,462.08 for a second consecutive record close, and the Nasdaq Composite gained 0.6% to finish at 23,547.17.