The bank expected the MSCI China Index to rebound further as valuations normalised and Beijing’s push to curb excess capacity boosted profitability across key sectors, said Wendy Liu, chief China equity strategist at JPMorgan.
“Earnings are giving us confidence,” Liu said during a media briefing on Tuesday. She added that China’s markets were moving through a period of earnings recovery after a slump between 2021 and mid-2024 discouraged investors and drove valuations to multi-year lows.
JPMorgan said the MSCI China Index would rise about 18 per cent by the end of 2026, while the CSI 300 Index would climb about 12 per cent. The MSCI Hong Kong Index would advance by up to 18 per cent, supported by an eventual recovery in capital flows and property sentiment. Consensus earnings growth across the three indices was expected to range from 9 to 15 per cent next year, she said.
A key driver would be the easing of an intense price war in the e-commerce and delivery sectors, which had masked underlying earnings improvements and weighed on the MSCI China Index this year, Liu said.
Meanwhile, Beijing’s “anti-involution” drive – aimed at reducing redundant capacity and unhealthy competition – was expected to support margin expansion, particularly in renewables and advanced manufacturing, Liu said. She described this as a structural shift that could affect the next decade, leading to consolidation and stronger returns on equity.
