Goldman Sachs is overweight on Chinese stocks for the Asia-Pacific region in 2026, forecasting a significant inflow of capital into China's equity markets, even without considering foreign investments.
According to Liu Jinjin, the investment bank’s Chief China Equity Strategist, the driving force behind this bullish outlook is strong earnings growth, which is expected to propel Chinese stocks higher this year.
Liu's analysis suggests that, in 2026, China's domestic investors will contribute approximately 3.6 trillion yuan in incremental capital to the Chinese stock market. A portion of these funds is expected to flow into Hong Kong stocks through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, two key trading links between mainland China and Hong Kong.
Breaking down the expected inflows, Liu pointed to individual investors as a major source of growth, with an estimated 2 trillion yuan expected to flow into China’s stock market. This influx is driven by a broader trend of retail investors increasing their equity allocations amid growing confidence in the stock market.
On the institutional side, insurance companies will play a pivotal role in driving capital into the market, as they continue to increase their allocations to equity assets. Goldman Sachs forecasts that approximately 1.6 trillion yuan in institutional capital will be directed toward Chinese stocks by 2026.
This projection reflects a broader trend in which Chinese investors, both individual and institutional, are expected to become increasingly bullish on domestic stocks, driven by improved corporate earnings and a desire to diversify their portfolios into equity-based assets.
Goldman Sachs' optimistic outlook aligns with a broader shift in China's investment landscape, where both retail investors and large institutions are progressively channeling more funds into the stock market, signaling a strong future for China’s equity markets.
As the country continues to witness a shift in investor behavior and an increasingly sophisticated financial market environment, the forecasted capital influx marks an important milestone in China’s ongoing market development. By 2026, domestic investors are expected to become the driving force behind the growth of Chinese stocks, with significant implications for market dynamics and overall investment strategies.
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