Bank of China predicts long, gradual bull market for A-shares amid reforms and recovery

China's A-share market has established a steady upward trend and is expected to benefit from capital market reforms and economic recovery, paving the way for a long and slow-bull market, Bank of China said on Wednesday.

The year 2026 marks the first year of China's 15th Five-Year Plan (2026–30) period. Macroeconomic policies are expected to continue applying targeted support to ensure a strong start to economic growth. With more proactive policy backing, domestic demand is likely to stabilize and rebound, according to a global asset allocation strategy report released by the bank on Wednesday.

Bank of China's personal banking department expects China's economic growth to range between 4.7 percent and 5 percent in 2026, while global liquidity conditions are expected to remain accommodative. Steady economic growth, combined with relatively attractive stock market valuations and the ongoing global "de-dollarization" trend, is likely to make Chinese equities a preferred destination for global fund rebalancing, the report said.

"Expectations of a steady and long bull market are growing stronger, and the anticipation of a stronger renminbi will accelerate global funds flowing into China, participating in the revaluation of Chinese assets," the report said.

It noted that Chinese assets are no longer merely typical emerging market assets, but high-quality assets deeply embedded in the global high-tech industrial chain.

"They are also crucial to the global 'de-dollarization' trend and serve as an essential international emerging safe asset," the report added.

Meanwhile, the Hong Kong stock market is benefiting from the internationalization of Chinese assets and easing external liquidity conditions. Bank of China recommends overweighting both A-shares and Hong Kong equities.

Guan Tao, global chief economist at BOC International (China) Co Ltd, said China's capital markets are facing four major opportunities: comprehensive reforms that will unlock policy dividends; economic transformation that is fostering new growth drivers; continuous improvements in the capital market system; and diversification of household asset allocation, which will drive global portfolio rebalancing and asset revaluation.

He added that core equity allocation should focus on autonomous and controllable technologies, emerging consumption trends, mergers and acquisitions among leading enterprises, innovative upgrading of traditional industries, and the industrial relocation of leading companies.