Standard Chartered keeps overweight call on China stocks, flags earnings recovery in 2026
Despite renewed ‘bubble’ talk around AI valuations after a November sell-off, Standard Chartered says the cycle is different this time
Standard Chartered said Chinese equities are looking more compelling after a period of consolidation, with cheaper valuations and earnings growth expected to rebound in 2026 from a low base in 2025, as monetary policy eases, global growth holds up and artificial intelligence-related investment stays strong.
“After a period of consolidation, valuations of Chinese equities have become more attractive, and earnings growth is expected to recover from a low base,” said Raymond Cheng, chief investment officer for North Asia at Standard Chartered.
Cheng added that 2026 – the first year of China’s 15th five-year plan – could bring more targeted stimulus measures aimed at supporting growth.
On that basis, the bank has kept an overweight view on China stocks and projected the Hang Seng Index to trade-in a 12-month base range of 28,000 to 30,000 points.
It cautioned, however, that downside risks remained. Standard Chartered said the index could slip to between 26,000 and 28,000 points if sentiment weakened, geopolitical tensions escalated or policy support fell short.
The bank’s outlook follows a sharp global pullback in November, when investors reassessed stretched AI valuations and heavy spending by tech companies.
While the debate over whether the AI-related capital expenditure was creating a market “bubble” was likely to intensify next year, Standard Chartered argued the current cycle differed from past episodes such as the dotcom boom, with AI-related investment underpinned by revenue growth and healthy free cash flow.