中国市场观察：识别中国近期上涨的基本面因素-China Market-Wise：Identifying the Fundamental Elements in China's Recent Rally

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the China equity market, specifically the MSCI China index, which has shown significant performance improvements over the past year and year-to-date (YTD) [2][9]. Core Insights and Arguments 1. Performance Metrics: - MSCI China has achieved a 48% total return over the past 12 months and a 38% total return YTD, making it the best-performing market globally [2][9]. - The market's rally is supported by structural improvements, including a bottoming out of return on equity (ROE) and a shift towards high-quality large-cap stocks [2][15]. 2. Earnings Growth: - Earnings growth has been a key driver of market returns for three consecutive years since 2023, contributing 0.6 percentage points (ppt) in 2023, 5.0 ppt in 2024, and 3.2 ppt YTD in 2025 [3][16]. - The positive earnings growth trajectory began to accelerate in the second half of 2024, with earnings growth contributing positively to monthly index returns approximately 75% of the time [3][19]. 3. Sector Contributions: - The sectors driving earnings growth include Internet, Financials, Technology, Capital Goods, and Materials, which are expected to account for about 80% of MSCI China's total earnings and earnings growth in 2025 and 2026 [4][28]. - Internet, Financials, and Technology now represent 76.9% of MSCI China's index weight, up from 70.4% in 2022 [24]. 4. Future Outlook: - The sustainability of earnings growth appears promising, with critical sectors showing positive revision trends and reasonable valuations [5][41]. - The risk of significant misses in consensus earnings estimates is decreasing, suggesting that the current momentum is likely to persist through 2026 [5][45]. 5. Earnings Estimate Revision Breadth (ERB): - MSCI China's ERB turned positive in August 2025, indicating a favorable trend in earnings estimate revisions, making it one of only two major global equity markets with this trend [22][41]. - Most sectors critical to MSCI China's EPS growth are showing positive ERB trends, with banks and consumer services being exceptions [45][41]. Additional Important Insights - The market has seen a significant increase in investor interest, the highest since the COVID-19 pandemic, although some investors still attribute the market's performance primarily to liquidity and sentiment rather than corporate fundamentals [13][15]. - The conference highlights the importance of understanding the drivers behind the index-level earnings growth to separate meaningful signals from noise [24][28]. - The anticipated wrap-up of severe price competition in e-commerce by the end of 2025 is expected to trigger earnings growth re-acceleration in 2026 [28][36]. This summary encapsulates the key points discussed in the conference call regarding the MSCI China index and its performance, sector contributions, and future outlook.