MW Cheap, underweighted, and ready to move. Why this dormant emerging market is about to stage a comeback.
By Jules Rimmer
Improvement in the property sector seen as a key driver behind China stocks, says Eurizon SLJ
The Chinese stock market is only marginally higher in 2026 but this European fund manager predicts a return to investor popularity as the property market stabilizes and the government's policies are seen as supportive of share prices
Chinese stocks are going to rally 10% between now and year-end as accommodating government policy, low valuations and a recovering property sector all combine to propel them higher.
This was the call from Stephen Jen, the chief executive officer of the EUR400 billion-plus asset manager Eurizon SLJ Capital and fellow portfolio manager Joana Freire, who explained the rationale behind their confidence in ongoing improvement for Chinese equities in a note that published Monday, according to a Bloomberg report.
Jen has been bullish on China for a couple of years now, during which time benchmark indices have increased by roughly a quarter, a stance predicated at least in part by the generally underweight positioning of global funds. Investor confidence in China has suffered repeated setbacks since the 'Big Tech Crackdown' around 2020, and the well-established crisis in the property sector caused by over-investment and speculation.
Jen and Freire argued that the property crunch is gradually improving with supply and demand rebalancing favorably. Moreover, London-headquartered Eurizon SLJ observes a boom in export profitability and a substantial buildup in household savings that may be released from bonds, currently yielding only 1.8% BX:AMBMKRM-10Y, and redirected toward a stock market rated just 18 times its price-to-earnings ratio.
The 10% increase in Chinese stocks predicted by Jen and team would lift the CSI 300 XX:000300 benchmark index from its present level around 4700 to north of 5000. A permanent cease-fire in the Middle East would send Chinese stocks higher in line with the rest of the world, while the appreciation of the yuan (USDCNY), widely-forecast in many quarters, would also augment returns.
China has some clear advantages over stock markets in the present environment. According to Gavekal Research, the country is estimated to hold around 1.3 -1.4 billion barrels of oil (BRN00) in stockpiled reserves. It has invested hugely in its renewables sector and battery technologies, which might partly explain why its leaders have projected a cool demeanor toward events in the Strait of Hormuz recently.
Citi strategist David Chew wrote favorably on China's fundamentals in his monthly stock market selection note last week. Chew ranked China CN:SHCOMP second only to Latam ILF among emerging markets EEM, which they prefer overall compared to developed markets.
So far in 2026, the CSI 300 index is up just 1.5%, although its twelve-month return is a more impressive 25%. The most commonly selected exposure for U.S. investors is the ishares MSCI China exchange-traded fund MCHI which has fallen 7% year to date and in pre-market trading Tuesday was marginally higher around $57.50.
-Jules Rimmer
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(END) Dow Jones Newswires
April 14, 2026 09:05 ET (13:05 GMT)
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