JPMorgan advised buying Chinese stocks. Why does he expect them to rise?
The bank advises investors to pay attention to the Chinese market - it has strong potential and attractive prices
JPMorgan raised its recommendation on Chinese shares to "above market". The bank believes that investors have an opportunity to enter the market at attractive prices after the recent correction. JPMorgan also expects Asian markets to strengthen in general and forecasts the MSCI Asia ex-Japan index to grow by about 15% next year.
Details
Investment bank JPMorgan Chase & Co. raised its recommendation on Chinese stocks to "above market," saying the potential for substantial growth in 2026 now outweighs the risks of serious losses, Bloomberg writes.
"China has almost regained its edge over other markets and now looks attractive for entry," said Rajiv Batra, a strategist at the bank, in a note published Nov. 26. - Several supportive factors will work together next year: the introduction of artificial intelligence technology, consumption stimulus measures and corporate governance reforms."
JPMorgan upgraded its recommendation amid a correction in China's stock market from multi-year highs reached about a month ago. The MSCI China index, which gauges how Chinese stocks are doing overall, fell 6.2% over the quarter, while the broader MSCI Asia Pacific, which reflects the performance of Asia-Pacific stocks, rose 1.3%.
Batra and his colleagues also advised buying Chinese stocks in early April. Since then, the MSCI China index has risen 33%, while the MSCI Asia Pacific has gained 37%.
Analysts estimate that China's stock market is still in the early stages of recovery from a prolonged downward cycle that began in late 2020. Therefore, "current valuations still look reasonable and investor positioning remains weak," they wrote in a note.
What is JPMorgan's outlook for Asia
Amid optimism on China, government support measures, high liquidity, governance reforms and a positive outlook for AI-related companies, JPMorgan believes Asian markets as a whole have a chance to show moderate or even strong growth in 2026.
According to the bank's forecast, the MSCI Asia ex-Japan index, which reflects the dynamics of shares of Asian countries except Japan, may rise to 1,025 points, which is about 15% higher than the current level. JPMorgan recommends holding an increased proportion of assets in China, Hong Kong, South Korea and India, neutral - in Taiwan and reduced - in Southeast Asian countries.
This article was AI-translated and verified by a human editor
