2 1 Shi Ji Jing Ji Bao Dao·2025-12-29 14:08Core Viewpoint - Foreign institutions are optimistic about the Chinese stock market for 2026, shifting their focus from "valuation repair" in 2025 to "profit growth" in 2026, driven by accelerating corporate earnings, macro policy support, and RMB appreciation [1][2][5]. Investment Trends - As of December 20, 2025, global investment in Chinese assets through ETFs has seen a net inflow of $83.1 billion, with the technology sector receiving the most inflow at $9.5 billion [1][9]. - Active foreign capital is expected to return to the Chinese stock market, with some institutions already increasing their positions in preparation for 2026 [10][12]. Earnings Forecasts - Goldman Sachs predicts a 38% increase in the Chinese stock market by the end of 2027, with corporate earnings expected to grow by 14% in 2026 and 12% in 2027 [3]. - UBS forecasts an increase in the Hang Seng Tech Index target to 7,100 points and the MSCI China Index target to 100 points by the end of 2026, indicating significant upside potential [3]. Valuation Insights - Morgan Stanley and Goldman Sachs believe there is still about a 10% potential for valuation repair in the Chinese stock market, which will support market growth [4][5]. - JPMorgan has upgraded its rating on the Chinese market to "overweight," citing reasonable valuations and light positions among international investors [4]. Sector-Specific Opportunities - The technology sector is highlighted as a core focus for profit growth, with opportunities in artificial intelligence, semiconductors, and high-end manufacturing [6]. - Traditional industries are also attracting foreign investment, with improvements in state-owned enterprise profitability and dividend increases acting as a dual engine for market growth [7][8]. Market Dynamics - The report indicates that the Chinese stock market will enter a new phase dominated by fundamentals, with a focus on structural investment opportunities [2][5]. - The anticipated return of active foreign capital is expected to be driven by improving corporate fundamentals, a weaker dollar, and the attractiveness of RMB assets [12].