China stocks are forecast to continue expanding in 2026, as equity gains are set to be driven more by earnings growth rather than increased valuation, according to Goldman Sachs, which correctly predicted the market’s bull run last year.
The MSCI China Index of both yuan-traded stocks and Chinese companies trading in Hong Kong and the US would potentially see a 20 per cent surge this year, while the CSI 300 Index that tracks the mainland-listed equities was projected to increase 12 per cent, Goldman analysts led by Kinger Lau said in a report on Wednesday.
Corporate profits could potentially grow as much as 14 per cent, the US investment bank said, on the back of the artificial intelligence boom and listed companies’ international expansion, compared with 2025’s single-digits growth.
“The intersection of low to mid-teen trend earnings per share growth, mid-range but undemanding valuations, and generally low investor positioning points to a favourable risk reward [scenario] for China equity,” the Goldman report said.
“Exports and AI tech would likely be the key contributors to market profits given higher overseas margins, policy support, and AI-related demand and investments,” the report said. It added that the yuan’s recent appreciation would also boost earnings denominated in the Chinese currency and the Hong Kong dollar.
In 2026, internet and hardware companies were also expected to report about 20 per cent profit growth year on year on the progress of AI monetisation and AI-related capital spending, according to the report. Carmakers may also double their profits this year, up from a low base in 2025, it said.
The latest market prediction by Goldman, which was one of the few investment banks to call “buy” on Chinese stocks last year, reflected how investors have diversified into Chinese tech stocks, from their US counterparts, while betting that policymakers would roll out more forceful policies to bolster China’s economic recovery.
