Investment banks bet on a synchronized rise in Chinese stocks and the yuan in 2026

At the beginning of 2026, investment banks and funds have built up positions in Chinese assets, signaling a decisive reversal towards the PRC amid global uncertainty. The largest players are betting on a rare scenario - synchronized growth of stocks and national currency.

Global investment banks from Goldman Sachs to Bernstein Societe Generale have upgraded their assessments of the Chinese market, citing cheap assets, government support and rising corporate profits. After Beijing allowed the yuan to appreciate above the key 7 per dollar mark, Citigroup, BNP Paribas, Bank of America and other investment giants are doubling down on the currency, expecting it to strengthen as much as 6.25 per dollar, Bloomberg writes.

Goldman Sachs last week raised its target for the mainland's CSI 300 index to 5,200 points - 9% above the close of trading on January 13 - and expects acceleration in Chinese corporate earnings growth in 2026-2027 thanks to the monetization of artificial intelligence, fiscal stimulus and excess liquidity in the market. Confirmation of investor enthusiasm is the record turnover of trading in mainland Chinese stocks - on Tuesday it reached 3.65 trillion yuan ($523 billion), states Bloomberg.

Hang Seng China Enterprises, an index of Chinese stocks traded in Hong Kong, rose more than 22% in 2025, becoming one of the leaders among the world's major stock indices. The yuan strengthened more than 4% against the dollar, posting its best performance in five years. This is the first synchronized rally of the two assets since 2017.

"Bulls" hope that the double rally will bring back confidence in the country's assets. The unexpected resilience of exports and industrial production makes even outsider sectors such as real estate reassess. A strong yuan can support Chinese equities by improving their dollar yields and risk appetite, and capital inflows into Chinese equities driven by rising profits can strengthen the currency, according to Franklin Templeton strategist Christy Tan.

In addition to AI, analysts believe in healthcare, battery production and the agribusiness sector, Bloomberg notes. Ben Charoenwong from INSEAD suggests doing the opposite: taking a closer look at Chinese real estate, a troubled sector that major global investors have preferred to avoid.

"The slow bull market trend in [PRC] equities will continue this year," predicts Wang Dan, chief investment officer of Shenzhen Sunrise Asset Management. Although the economic fundamentals and statistics do not yet warrant a full-fledged rally, lower interest rates, investors' willingness to allocate capital to China and a long-term bet on undervalued assets are setting the stage for the uptrend to continue, she believes.

This article was AI-translated and verified by a human editor