As the global investment landscape faces increasing uncertainty at the start of 2026, investors are showing renewed confidence in Chinese equities and the yuan, ramping up their exposure to the world’s second-largest economy.
Financial institutions such as Goldman Sachs Group, Bernstein Societe Generale Group, and other prominent firms have expressed a more favorable outlook on Chinese stocks, attributing their stance to attractive valuations, supportive sector policies, and an optimistic outlook for corporate earnings.
Meanwhile, Beijing’s move to let the yuan surpass the significant 7-per-dollar threshold has sparked additional enthusiasm for the currency. Forecasts from firms like Citigroup, BNP Paribas Asset Management, and Bank of America Corp. point to further strength in the yuan, with some projecting it could appreciate to as high as 6.25 by year-end.
Last year, China experienced an unusual simultaneous rally in both its stock and currency markets—a dynamic that has helped bolster investor sentiment around Chinese assets. The country’s sustained export momentum, renewed growth in manufacturing, and a stable financial system are contributing to optimism, prompting renewed attention toward sectors that had previously lagged, such as real estate and consumer stocks.
A stronger yuan has the potential to enhance returns for dollar-based investors and bolster market confidence, according to investment strategies at Franklin Templeton Institute. Conversely, genuine equity inflows stemming from improving earnings and renewed confidence are also likely to support the currency.
The performance of Chinese companies listed in Hong Kong was notable in 2025, with a key equity index rising more than 22%, making it one of the best-performing markets globally. The yuan itself gained over 4% against the dollar, its most robust advance in five years, marking the first concurrent rally for both Chinese stocks and the currency since 2017.
Goldman Sachs recently increased its 2026 year-end target for the CSI 300 onshore benchmark to 5,200, indicating a potential 9% rise from Tuesday’s closing value. The firm also expects Chinese corporate earnings growth to accelerate to 14% for both 2026 and 2027, up from 4% in 2025, driven by the monetization of artificial intelligence, ongoing policy support, and ample liquidity.
Wang Dan, chief investment officer at Shenzhen Sunrise Asset Management, suggests that while current economic data may not support a full-fledged bull market, factors such as lower interest rates, increased appetite for investment allocation, and long-term investments in undervalued assets are likely to underpin a sustained upward trend in the market.
