UBS: With earnings growth supporting upside, Chinese assets not overheated

With valuations not yet entering overheated territory, solid earnings growth, and recovering global investor interest to support future market growth, China's equity markets still have room to run, according to a senior UBS executive.

Janice Hu, China country head of UBS and chairperson of UBS Securities, said the MSCI China Index is trading at price-to-earnings ratios just above 13 times — only slightly higher than the 10-year average.

"Investor participation remains markedly below historical peaks, and the current rally is not driven by excessively crowded trades," Hu said, adding that investors are instead "finding diamonds in the rough" by identifying companies tied to new quality productive forces.

She noted that the overall monetary environment is likely to stay accommodative for Chinese equity markets while more Chinese companies are shifting from scale-driven expansion toward strengthening fundamentals and improving their profitability, technological barriers, innovation capacity, and global competitiveness.

Looking ahead, Hu said the earnings growth of the MSCI China Index could reach 14 percent or more in 2026, with key momentum coming from internet platforms, high-end manufacturing, and companies expanding overseas.

Hu added that there is a solid basis for the momentum in Hong Kong's IPO market to continue into 2026 — as total fundraising may exceed HK$300 billion ($38.5 billion) and the number of listings may reach between 150 and 200.

"Hong Kong remains a core platform for onshore companies to connect with global investors," she said, adding that UBS is actively identifying new opportunities to support Chinese companies in their international expansion and helping global capital participate more efficiently in the country's growth story.