China's equity rally gains momentum

China's A-share market extended its strong run at the start of 2026, with the Shanghai Composite Index breaking through last year's interim peak on Tuesday and reaching its highest level since late July 2015. The renewed momentum comes as investors signal growing confidence in Chinese assets and expectations for a sustained market upswing over the next two years.

In a newly released strategy report, Goldman Sachs issued one of the firm's strongest bullish calls on China in recent years, advising investors to "significantly overweight" Chinese equities within regional portfolios. The bank forecasts that improving corporate earnings and ongoing valuation recovery will jointly underpin a steady bull market in 2026 and 2027, with annual returns projected at 15 percent to 20 percent on average, as reported by Global Times.

Goldman Sachs also noted that China has already re-emerged as a competitive market in global performance terms. According to its Global Equity Strategy report, Europe, China and Asia delivered almost twice the total returns of the US in dollar terms in 2025, highlighting a shift in global capital flows and investor interest.

Speaking to Bloomberg, Hong Hao, chief investment officer at Lotus Asset Management, said confidence has returned to China's domestic equity market, pointing to reviving risk appetite and optimism fueled by technological breakthroughs and policy support.

China's A-share market continued to show strength in early trading on Wednesday. By midday, the Shanghai Composite Index was up 0.29 percent, the Shenzhen Component Index rose 0.35 percent, and the ChiNext Index gained 0.41 percent.