Summary:
-
Goldman sees Chinese equities rising further in 2026
-
MSCI China +20%, CSI 300 +12% targeted
-
Returns expected to be earnings-driven
-
AI, exports and policy support key pillars
-
Valuations seen as reasonable, flows supportive
Goldman Sachs expects Chinese equities to continue rising through 2026, supported by artificial intelligence adoption, policy support and improving earnings momentum, though returns are likely to moderate from the exceptional gains seen in 2025.
In a report published this week, Goldman strategists led by Liu Jingjin forecast the MSCI China Index to rise a further 20% from end-2025 to end-2026, while the CSI 300 Index is projected to gain around 12% to roughly 5,200. Early-year performance has already been strong, with both indices rising more than 3% since the first trading day of 2026 and outperforming the S&P 500.
Goldman argues that 2026 returns will be predominantly earnings-driven, marking a shift away from valuation-led rebounds. Corporate profit growth is expected to be underpinned by artificial intelligence deployment, China’s “going global” export strategy, and policy efforts to curb destructive over-competition across industries.
The bank identifies five major capital flow channels that could underpin equities: record southbound inflows of up to USD 200bn; domestic asset reallocation potentially channelling RMB 3tn into stocks; dividends and buybacks approaching RMB 4tn; global active funds moving from underweight to overweight China exposure; and IPO financing exceeding USD 100bn, signalling renewed market vitality.
At the macro level, Goldman economists have lifted their 2026 GDP growth forecast above consensus, citing resilient exports and improving export diversification. While consumption and property investment remain weak, strategists argue their drag on growth is gradually diminishing. Policy conditions are also seen as supportive, with the launch of the 15th Five-Year Plan expected to maintain a pro-market window via monetary easing, fiscal expansion and improved treatment of private enterprises.
Valuations are no longer distressed but remain reasonable. Forward P/E ratios stand at around 12.4x for MSCI China and 14.5x for CSI 300 — broadly in line with long-term averages.
Sector-wise, Goldman is most bullish on TMT, forecasting around 20% earnings growth driven by AI-related revenue and capex. The bank also remains overweight technology hardware, media and entertainment, internet retail, materials and insurance.
Goldman highlighted a group of ten “China champions” / “Prominent 10”:
- including Tencent, Alibaba, CATL, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Pharma and Trip.com
which together account for roughly 40% of MSCI China’s weight and are expected to deliver mid-teens earnings growth.
Risks flagged include a potential global recession, persistent geopolitical tensions and the possibility of an AI-related valuation correction, though Goldman argues China’s lower valuations and broader AI exposure offer relative insulation
