China Securities Co., Ltd.: It is expected that A-shares will welcome a considerable amount of incremental funds in 2026, potentially driving the continuation of a slow bull market.

China Securities Co., Ltd. released a research report stating that it is expected that in 2026, A-shares will welcome a substantial amount of incremental funds, which may continue to drive a slow bull market. In terms of timing, the first quarter is the peak of regular deposits maturing, and funds may enter the equity market from insurance and wealth management channels, making it the most abundant time for incremental funds throughout the year. In terms of structure, medium to long-term funds account for about 1/3 of all fund inflows, and have become a key cornerstone of micro liquidity in the A-share market; public and private equity funds are expected to be the two major directions for marginal improvement, and their allocation preferences may affect market style performance. In 2026, the main contradictions in the market will shift to economic validation and performance realization, with medium to long-term funds providing a safety cushion. Active funds such as public and private equity funds will further strengthen the "technology + resources" dual-theme market, while sector rotation may accelerate. The main points of China Securities Co., Ltd. are as follows: Medium to long-term funds: core sources of incremental funds Under pressure from residents migrating their savings and asset scarcity, insurance premiums have continued to grow rapidly, with the equity allocation ratio reaching 15.5% in Q3 2025, near a historical high. The risk factor adjustment has released additional investment space of hundreds of billions of yuan; wealth management and "fixed income +" benefit from the wave of 45 trillion yuan of maturing time deposits, which will bring incremental equity allocation to the A-share market in 2026; together, they are expected to contribute more than 900 billion yuan in medium to long-term funds entering the market. Public equity funds: enhanced market entry motivation for individual investors The time with the greatest pressure on fund redemptions has passed, public equity funds are benefiting from net asset value restoration and profit-making effects, and individual investors are gaining strength in entering the market. It is estimated that there will be a net inflow of 230 billion yuan in 2026, with passive funds becoming the main force. Other fund channels: differentiation and improvement coexist The inflow of "national team" funds has slowed significantly in a bull market environment, with an expected net inflow of around 20 billion yuan in 2026, with ETFs becoming the main allocation channel. Margin trading and high-risk funds such as private equity remain active, with an expected net inflow of 450 billion yuan in margin trading in 2026, and the continued size of private equity is expected to increase to 8.5 trillion yuan, bringing about 700 billion yuan in incremental funds. Overseas funds entering the "4.0 era", global funds are expected to strategically allocate to Chinese assets, with northbound funds expected to have a net inflow of around 100 billion yuan. With the support of incremental funds, the main focus of the market in 2026 is on economic validation.