Morgan Asset Management: The profit recovery of Chinese industrial enterprises will accelerate, with future focus on consumer electronics, lithium batteries, expanding domestic demand, and large finance

Where are the investment opportunities in China heading in 2026? JP Morgan Asset Management recently held a New Year investment strategy meeting and released its latest views on global and domestic markets. Jiang Xianwei, Senior Global Market Strategist at JP Morgan Asset Management China, stated that looking ahead to 2026, global economic growth may slow down. As interest rates gradually decline, the pace of monetary policy tightening in mature markets is expected to ease, and the low interest rate environment is likely to continue supporting the economy. For China, as external uncertainties diminish, the domestic policy environment is expected to remain friendly. Coupled with the recovery of the corporate earnings cycle and the constraints of "anti-involution" policies on capacity expansion in certain industries, the profit recovery process for industrial enterprises is expected to accelerate. In terms of asset allocation, Jiang Xianwei indicated that improvements in corporate earnings are likely to support the performance of global equity markets. However, in the context of high valuations and geopolitical uncertainties, investors need to appropriately lower return expectations and diversify allocations to mitigate risks. Specifically regarding regions and sectors, the attractiveness of the A-share market is expected to further increase. It is recommended to focus on high-prosperity core assets, sectors related to overseas expansion, and areas with improving supply-demand dynamics. In terms of bonds, the coupon advantage of overseas bonds remains significant, and in the context of a slowing pace of interest rate cuts, short-duration government bonds in mature markets should be a focus. Li Bo, Head of the Balanced Growth Group of the China Equity Team at JP Morgan Asset Management, stated that the opportunities in the A-share market in 2026 are expected to outweigh the risks, and structural investment opportunities are likely to continue emerging. In terms of investment, Li Bo believes there are four main areas to focus on: first, consumer electronics may still be in a major innovation cycle, with leading companies' valuations at relatively historical lows, and annual performance expected to grow steadily, potentially possessing long-term allocation value; second, in the lithium battery supply chain, the old-for-new subsidy policy exceeds expectations, supporting domestic electric vehicle demand in 2026, with annual lithium battery demand expected to grow; third, in the large financial sector, if the equity market continues a slow bull trend, the fundamentals of the non-bank sector are likely to remain prosperous; fourth, "expanding domestic demand" has been listed as a key focus for economic work in 2026, with a focus on tracking the rise of emerging sub-sectors. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk.