Morgan Stanley's Wang Ying releases the 2026 China Stock Strategy Outlook: Next year will be a year of stabilization.

Recently, Morgan Stanley's Chief China Strategist Wang Ying released the 2026 outlook for Chinese stocks. Wang Ying stated that after a high return in 2025, 2026 will be a year of stabilization. With limited upside potential for the index, moderate profit growth, valuations stabilizing in a higher range, China standing firm in the global technology competition and easing trade tensions, stock selection based on fundamentals and themes remains key. Wang Ying stated that Morgan Stanley has slightly raised its target for the Chinese stock index for 2026 as the forecast cycle rolls on, maintaining a relatively conservative view on profit growth for the year, and considering a reasonable 12-month forward P/E ratio range for the MSCI China Index of 12-13 times. "According to our latest global roadshow feedback, international investors still show strong interest, and we expect southbound funds to continue supporting liquidity in the Hong Kong market. Our analysis of the A-share market shows that there is still ample room for rotation from bonds and time deposits to stocks. We expect offshore and onshore A-share markets to perform roughly the same," Wang Ying said. In terms of industry preferences, Wang Ying stated, maintaining a "barbell strategy": overweighting high-quality internet and technology leaders, while underweighting industries affected by macroeconomic drag such as real estate, essential consumer goods, and energy. At the same time, maintaining a selective allocation to high dividend stocks to achieve stable cash returns.