Stocks in China and Hong Kong could post gains of close to 20% in 2026, driven by resilient global growth, a recovery in profits and less competition, forecasts investment bank JPMorgan.
The North American financial institution estimates that the MSCI China index will rise by around 18% by the end of next year, while the CSI 300, which brings together the largest companies listed in the financial markets of mainland China (Shanghai and Shenzhen), is expected to rise by 12%.
MSCI Hong Kong could advance as much as 18%, supported by a gradual recovery in capital flows and sentiment towards the property sector.
“The earnings are giving us confidence,” said Wendy Liu, Chinese equity strategist at JPMorgan, during a conference with journalists. Liu stressed that Chinese markets are going through a phase of earnings recovery, following a slump between 2021 and mid-2024 that scared off investors and pushed valuations to multi-year lows.
The strategist pointed to the easing of the price war in e-commerce and logistics as a determining factor, which this year disguised the improvement in underlying profits and penalized the performance of MSCI China.
Liu also highlighted the impact of Beijing’s campaign against “involution” – a term used to describe excessive competition and increased production capacity –, which should favor the expansion of margins, especially in renewable energy and the advanced manufacturing sector. “It’s a structural change, which could mark the next decade, leading to consolidation and stronger returns on capital,” he said.
JPMorgan also maintains an optimistic position regarding equipment linked to artificial intelligence and energy storage systems, benefiting from increased investments in data centers. Demand for batteries and solar components to power these infrastructures could grow faster than investment in technology overall, according to Liu.
Domestic consumption continues to be the “most debated” topic, with families maintaining a cautious stance, despite the increase in savings and the reduction in debt, the analyst pointed out. The possibility of a new escalation in Sino-American tensions or a rekindling of the price war between logistics platforms are risks to be taken into account, he warned.
But Liu described the outlook as “optimistic”, with investors showing greater discipline than in previous appreciation cycles. “We are in the middle of an expansion phase of growth, and profits are looking good”, he summarized.
In the case of Hong Kong, Liu said market performance remains strongly correlated with capital flows, influencing financial assets, residential real estate and discretionary consumption.
Meanwhile, HSBC Private Bank set a target on Tuesday of 31,000 points for the Hong Kong Hang Seng index by the end of 2026, which represents an increase of 22% compared to the previous day’s close. The bank attributes this forecast to improved liquidity and profits, highlighting that stimulus to domestic consumption in China, the stabilization of the Hong Kong housing market, the increase in retail activity, the resumption of tourism and a new wave of initial public offerings (IPO) should support the region’s recovery.