UBS Research: 1H26 China Equity Earnings Review and 2H26 Sector Strategy

Key Takeaways

• 1.1H26 earnings reflected a K-shaped recovery in China: AI technology, health care, autos, and exporters beat expectations, while domestic consumption, property weakness, and industrial capital spending lagged.
• 2.Corporates emphasized shareholder returns and capital discipline through higher dividend payout ratios (especially SOE banks), cost reduction, and share buybacks.
• 3.UBS favors health care, AI semiconductors/hardware, power equipment, and large state-owned banks for 2H26.

Table of Contents

• 1H26 results: A mixed but constructive outcome
• Autos – Encouraging results amid strong export growth and premiumization
• Banks – Improving growth and higher payouts
• Consumer Discretionary
• Sportswear – Cost discipline and diversified brands mitigate the downturn
• Home Appliances – Leaders remain resilient as the cycle softens
• Consumer Staples
• Dairy – A healthier, gradual recovery
• Energy – Resilient earnings and dividends
• Health care – Recovery broadens beyond the pipeline
• Industrials – Mixed results; export growth offset by FX losses
• Insurance – Strong earnings but tougher comparisons
• Internet – AI monetization improving gradually
• Materials – Greater focus on capital management
• Power Equipment – Encouraging results, but geopolitical risks cap near-term upside
• Technology – Semiconductors and hardware: AI exposure still key growth driver
• Risk table

Report data

Table 1 - Stock picks (post-1H26 results season) — as of September 6, 2026.