As we enter 2026, the performance of the Chinese stock market is prompting a global reassessment by international capital. The A-share market has maintained its upward trajectory since the beginning of the year, with the Shanghai Composite Index firmly holding above the psychologically important 4,100-point level. In the long term, this is not merely a sentiment-driven "sudden rally." Throughout 2025, continuously expanding trading volumes and financing levels laid a more solid foundation of capital and structural support for this current upswing. Even more noteworthy is the directional shift in the attitude of foreign capital underpinning this market movement. Entering 2026, several major foreign financial institutions, including Goldman Sachs, JPMorgan Chase, Morgan Stanley, and UBS, have notably turned positive on Chinese assets in their annual and new-year outlooks. The core discussion has subtly shifted from "whether to allocate to Chinese assets" to a deeper analysis of "how long this rally in Chinese stocks can last and what its potential upside might be." Goldman Sachs maintains an "overweight" rating on A-shares, forecasting gains of 20% for the MSCI China Index and 12% for the CSI 300 Index in 2026. JPMorgan Chase, meanwhile, has upgraded its rating on A-shares to "overweight," predicting the CSI 300 could reach a target level of 5,200 points. However, index levels are merely the surface; the more critical change lies in the underlying logic. While 2025 was largely characterized by valuation repair, starting in 2026, the market is entering a new phase driven by earnings improvement and structural growth. Against this backdrop, why are foreign investors increasing their allocations to Chinese assets once again? The A-share market is becoming an investment destination for risk diversification. From the fundamental logic of global asset allocation, risk diversification has become a consensus for a growing number of foreign investors. The Chief Investment Officer for Emerging Markets at Deutsche Bank's International Private Bank noted that for a considerable period, particularly foreign investors, have maintained investment portfolios heavily concentrated in US dollar assets. However, as market volatility has increased, investors are gradually realizing that US dollar assets themselves carry significant risks, especially when capital is excessively concentrated in a handful of large technology companies, leading to a marked rise in portfolio volatility. In this context, investors are beginning to consciously diversify their portfolios by allocating to other assets. The CIO pointed out, "Chinese stocks have maintained relatively low valuation levels over the past few years, a characteristic that gives them unique appeal in global asset allocation." From the perspective of capital flows and the macroeconomic environment, as the Federal Reserve enters an interest rate-cutting cycle and the US dollar weakens, global capital is seeking new growth and allocation directions. The Asia-Pacific market, particularly China, is poised to be a key beneficiary. The Chief Investment Strategist at Standard Chartered China's Wealth Management Division holds a similar view. He advises investors, while retaining their US stock allocations, to adopt a more forward-looking diversification strategy by shifting some allocation from US stocks to the Asia-Pacific markets. The strategist directly expressed firm confidence in the Chinese market. He believes the core appeal of the Chinese market stems from the convergence of multiple positive factors: on one hand, the effects of policies aimed at stabilizing growth and promoting development over the past year are continuing to materialize, leading to more stable macroeconomic operations; on the other hand, the A-share market has clearly emerged from its previous low range, forming a more distinct upward trend driven by the sustained release of policy dividends and a gradual recovery in demand. The strategist indicated that the trend of "capital flowing into Asia-Pacific markets" has been preliminarily validated by the recent performance of sectors related to the regional AI industry chain. This trend is expected to continue, and sustained capital inflows will further support regional market performance. Opportunities are emerging in multiple technological sectors, including AI. Alongside the inflow of real capital, structural opportunities within the A-share market are becoming increasingly clear. High-tech sectors such as AI infrastructure, semiconductors, and robotics,凭借 their high earnings elasticity and reasonable valuations, have become a core focus of market attention. Using policy direction as an example, the CIO illustrated that key industries explicitly mentioned in the proposals for the 15th Five-Year Plan, including new energy, photovoltaics, robotics, automation, and high-end manufacturing, have already formed complete industrial layouts within the A-share market, offering investors a range of investment targets across diverse sub-sectors. Beyond the technology sector, the structural dividends arising from China's continuous expansion of its opening-up policies are also drawing significant attention from long-term investors. A renowned investor and co-founder of the Quantum Fund, Jim Rogers, shared his investment strategy, stating that China's ongoing efforts to open up will directly benefit related industries such as tourism, aviation, and hotels. "I currently hold about twenty to thirty stocks, mainly concentrated in the aviation sector and all sectors related to tourism and leisure," Rogers revealed. "Balanced Allocation" and "Long-Term Holding" may be key. Of course, opportunities and risks always coexist. While optimistic about the medium- to long-term prospects of the Chinese market, the strategist also cautioned investors to be mindful of potential periodic volatility risks in global capital markets. Regarding Chinese asset allocation, he suggested adopting an "A+H dual-market layout" strategy to optimize portfolio structure. From an industry distribution perspective, A-shares aggregate a large number of high-quality companies in hard technology sectors, while large-cap leaders in internet and AI-related fields are more concentrated in the H-share market. Coordinated allocation across both markets can enhance allocation efficiency while effectively diversifying the risks associated with a single market's volatility. From a long-term investment perspective, Rogers emphasized the importance of a "long-term approach" in capturing opportunities in the Chinese market. He stated that he has held Chinese stocks for many years and, despite the significant recent appreciation, has not chosen to reduce his positions. "I hope I never have to sell these stocks; my children will inherit them." From the rebalancing allocations of global capital, to the active positioning in Asia-Pacific markets, and the steadfast holdings of long-term investors, a series of signals indicate that Chinese assets are gradually shedding their previous status as a valuation洼地 and becoming an indispensable core component in global investment portfolios. Supported by multiple factors—including a steady macroeconomic recovery, the continuous release of policy dividends, and accelerating global capital inflows—the long-term value of the Chinese stock market is being rediscovered and recognized by the global market. (Disclaimer: The content is for reference only and does not constitute investment advice. Investors proceed at their own risk.)
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