China Equity Strategy

The report provides a 2H26 outlook for China equities, recommending a shift from a purely AI-centric stance to a more balanced portfolio that includes industrials and materials. It increases the target for the SZCOMP index and suggests specific sectors for overweight/underweight positioning.

Key Takeaways

• 1.Maintain a bullish outlook on AI but diversify portfolios due to high concentration.
• 2.Broadening performance expected in 2H26 from AI-centric to non-AI sectors (industrials, materials).
• 3.Raised SZCOMP index target to 17,000, signaling 15% upside.

Table of Contents

• From AI to non-AI?
• Asymmetric risks
• Earnings, liquidity, and valuation
• Index targets, market style, and sector allocations
• Investment themes and stock ideas