New survey highlights divergence of market expectations

Investor sentiment toward China's capital markets remained broadly resilient toward the end of 2025, characterized by a clear divergence between rising optimism among retail investors and a shift toward prudence among financial professionals, according to a survey by the Cheung Kong Graduate School of Business.

The latest investor sentiment survey released on Wednesday found that 62.3 percent of respondents expected China's A-share market to rise, largely unchanged from the previous quarter. However, beneath the headline figure, views diverged, reflecting different assessments of valuation, risk, and market sustainability.

Retail investors became more upbeat, with 64.2 percent expecting gains, while confidence among financial-sector respondents adjusted to 59.8 percent, highlighting a more cautious stance among professional investors.

"The overall mood is stable, but the drivers of confidence are evolving," said Liu Jing, professor of accounting and finance at CKGSB, who led the survey. "Retail investors tend to respond more to market momentum, while professionals are more keenly focused on valuation metrics and the sustainability of returns."

The quarterly survey, conducted in December among around 1,300 investors and 800 financial professionals, broadly mirrors market performance over the past year. After solid gains in the first three quarters of 2025, China's stock markets entered a period of consolidation.

CKGSB's analysis suggests that this caution is closely linked to valuation dynamics. The report estimates that overall A-share market valuation rose more than 20 percent in 2025, while corporate earnings growth remained broadly flat, indicating that the rally was driven largely by valuation expansion rather than a broad-based improvement in fundamentals.

"After a valuation-led rally, it is natural for professional investors to reassess return expectations," Liu noted. "This reflects healthy prudence, rather than a loss of confidence."