Executive Summary
– The Chinese equity bull market continues into 2026, but the driving logic has shifted from narrative-driven speculation to earnings-based validation, requiring a recalibration of investment strategies.
– Gold and commodities outperformed in 2025, with gold rallying 65%, but sustained gains in 2026 hinge on Federal Reserve policy, dollar weakness, and central bank demand.
– A-shares are transitioning from a valuation-recovery phase to a profit-verification stage, with technology remaining a core theme but attention expanding to sectors like industrials, consumer cyclicals, and Hong Kong equities.
– Massive household deposit maturities—estimated at 57 trillion yuan—are poised to fuel further ‘deposit migration’ into wealth management products and capital markets, providing structural liquidity support.
– Asset allocation in 2026 demands fine-grained management of uncertainty, with a recommended focus on precious metals, selective equities, and beneficiaries of renminbi appreciation.
A Pivotal Moment for Global Investors
Three years ago, a three-year time deposit could yield 3.1%. Today, that rate has plummeted to 1.7%. This stark reality led Ms. Zhang to redirect a portion of her maturing savings into bank wealth management products. Her decision encapsulates a broader, seismic shift unfolding within China’s financial system in 2025 and beyond. As deposit rates trend lower, a profound restructuring of household assets is underway, with flows moving decisively toward equities, gold, and various asset management vehicles. The conversation has moved from saving to investing, dominating social media and public discourse. The burning question for 2026 is not whether the bull market persists but with a new thesis—how it persists. The era of easy gains from broad momentum is giving way to a more nuanced phase where discernment between sectors and fundamentals will separate winners from losers. For institutional investors and corporate executives globally, understanding this evolution is critical for capitalizing on China’s next market chapter.
2025 In Review: Gold’s Dominance and A-Shares’ Resurgence
The Unstoppable Rally in Precious Metals
The year 2025 will be remembered for the spectacular performance of gold. The yellow metal cemented its status as the year’s standout asset, closing above $4,300 per ounce and posting a staggering 65% annual gain. This rally was fueled by a confluence of factors: geopolitical tensions, expectations of a Federal Reserve pivot, and strong central bank buying. The surge was mirrored in investment flows, with domestic gold ETF holdings in China approximately doubling. By end-2025, the total scale of China’s gold ETFs reached approximately 242.8 billion yuan, up 242% year-on-year, demonstrating intense retail and institutional appetite.
Silver joined the party, outperforming even gold due to its dual role as a monetary metal and a critical industrial component for green energy technologies like photovoltaics and electric vehicles. COMEX silver skyrocketed 129.83% in 2025. The broad commodities complex also shone, with copper rising 42.52%, LME aluminum up 17.46%, and DCE iron ore gaining 11.20%. In stark contrast, Brent crude oil fell 7.94%, highlighting the divergent paths within the resource sector.
A-Shares: Ignition and Ascent
For Chinese equities, 2025 was a year of awakening. The launch of advanced AI models like DeepSeek ignited a technology-led rally early in the year, propelling the Shanghai Composite Index above 3,400 points. A mid-year dip triggered by global trade tensions saw the index retreat to around 3,096, only to be stabilized by supportive measures from state-backed funds like Central Huijin. The market then embarked on a sustained bull run, breaching the psychologically significant 4,000-point level by late October. Throughout the year, thematic waves—from artificial intelligence and humanoid robots to semiconductors and commercial aerospace—captured investor imagination. The non-ferrous metals sector was another major beneficiary, riding the wave of rising industrial metal prices driven by robust demand from renewable energy and data center infrastructure. This period underscored that the bull market persists but with a new thesis, one initially built on technological promise and macro liquidity.
The 2026 Crossroads: Managing Volatility and Shifting Fundamentals
Global Policy and Currency Dynamics
The opening weeks of 2026 delivered a stark reminder of market volatility. The nomination of a new Federal Reserve Chair triggered sharp swings in precious metals prices, illustrating the sensitivity to U.S. monetary policy outlooks. Most analysts, including those at China Galaxy Securities, anticipate the Fed to maintain an easing cycle in 2026, with rate cuts and a halt to balance sheet contraction. This scenario is expected to press U.S. Treasury yields and the U.S. dollar lower, enhancing the attractiveness of dollar-denominated commodities like gold, silver, and copper.
Simultaneously, a consensus is forming around the renminbi’s trajectory. With the Fed in a cutting cycle and domestic price levels in China expected to recover, a steady appreciation of the Chinese currency is forecasted. Zhao Wei (赵伟), Chief Economist at Shenwan Hongyuan, notes that the renminbi entered an appreciation channel in 2025 and this trend is likely to solidify over the coming years, reshaping the behavior of international capital allocating to Chinese assets.
The Great Deposit Migration and Liquidity Infusion
A structural tailwind for Chinese equities stems from the domestic savings pool. Based on 2025 interim reports from the big six state-owned banks, Guosen Securities estimates that approximately 57 trillion yuan in time deposits are set to mature in 2026, with a concentration early in the year. This colossal sum represents potential fuel for financial markets. Historical analysis shows a strong negative correlation between deposit rates and the proportion of savings held in non-bank products. As rates stay low, the ‘deposit migration’ phenomenon is poised to continue. However, the influx is increasingly channeled through institutional conduits like bank wealth management products and passive funds, which then increase their equity allocations, rather than through direct retail trading. This provides a more stable and measured source of liquidity for the A-share market.
The New Investment Thesis: From Imagination to Earnings Verification
If 2025 was a year for pricing imagination and narrative, 2026 demands a focus on tangible results. The bull market persists but with a new thesis centered on corporate profit delivery and fundamental validation. Interviews with numerous fund managers reveal a common expectation: market style will become more balanced, and earnings repair will emerge as the core variable driving stock performance.
Tang Xiaodong (唐小东), Co-Head of the Macro Strategy Department at Southern Fund, suggests that while the domestic economy will maintain stability, market expectations, geopolitical developments, and the pace of technological industrialization will be more influential on equity prices than marginal fluctuations in GDP growth.
Redefining the Opportunity Set
Institutional research points to several restructured investment lines:
– Technology’s Evolution: The AI theme is expected to progress from infrastructure build-out to application monetization. Opportunities will persist in areas like computing power and optical modules, with a growing emphasis on domestic supply chains. Downstream applications in robotics, consumer electronics, and intelligent vehicles will come under greater scrutiny for user adoption and revenue generation.
– Global Demand and Supply Chains: Sectors capable of ‘exporting their way out’ of domestic competition will be rewarded. This includes home appliances, engineering machinery, commercial vehicles, and grid equipment, alongside globally priced resource plays like copper and aluminum.
– Domestic Cycle Reversal: Attention is turning to beaten-down sectors where supply-demand dynamics or policy support may be nearing an inflection point. Examples include certain chemical subsectors, agriculture, and segments of the new energy industry that have undergone severe consolidation.
Fang Han (方晗), Director of Equity Strategy Research at Harvest Fund, outlines a two-pronged approach: focusing on mid-to-low valuation plays within the expanding ‘AI+’ ecosystem, and identifying undervalued domestic demand sectors that could benefit from anti-internal competition policies and stimulus measures aimed at boosting consumption.
Strategic Asset Allocation for the Mature Bull Phase
Gold and Commodities: Assessing Sustainability
Despite the breathtaking rally, the outlook for gold remains cautiously optimistic among professionals. Gregory C. Shearer, Head of Base and Precious Metals Strategy Research at J.P. Morgan, projects that sustained diversification demand from central banks and investors could push gold to $6,300 per ounce by end-2026 and toward $6,600 in 2027. The key drivers are intact: a weakening dollar, lingering geopolitical risks, and the metal’s role as a non-sovereign store of value. However, the path will be volatile, demanding strategic accumulation rather than speculative chasing.
In its 2026 Global Asset Allocation White Paper, Bank of China ranks asset classes in the following order for the year: precious metals, industrial metals, equities, and then bonds. This view reinforces the commodity complex’s appeal but also notes that silver and gold may continue to outpace base metals like copper.
Equity Markets: A-Shares and the Hong Kong Wildcard
For equities, the liquidity environment appears supportive. Beyond domestic deposit shifts, regulatory guidance is pushing long-term domestic insurance and pension funds to increase equity exposure. Furthermore, the prospect of a strengthening renminbi is likely to attract incremental foreign investment. The Hong Kong market, trading at a persistent discount to A-shares and heavily weighted toward internet and finance giants, is increasingly cited as a potential ‘dark horse’ for 2026, should sentiment toward China assets improve globally.
Li Qiusuo (李求索), Chief China Equity Strategist at CICC, advises investors to monitor the duration of bull markets. Historical analysis shows that A-shares and Hong Kong stocks have been in a bull phase for 1-2 years,接近 the historical median length. Gold’s bull market is around 3 years old, and the U.S. stock market’s is about 3 years, both with room to run based on median cycle lengths. The absence of tight monetary policy in China, given moderate inflation and steady growth, suggests no imminent catalyst for a broad market top.
Synthesizing Insights for Forward-Looking Portfolio Construction
The collective intelligence from fund managers, strategists, and economic data paints a clear picture: the bull market persists but with a new thesis. The low-hanging fruit has been picked. Success in 2026 will depend on granular sector selection, a keen eye on profit trajectories, and disciplined risk management amidst expected volatility.
For the global investor, action steps are evident:
– Rebalance commodity exposure, particularly in gold and silver, using price dips as entry points for long-term strategic holdings rather than tactical bets.
– Within Chinese equities, shift allocation toward companies with visible earnings recovery paths, robust export capabilities, or exposure to policy-supported domestic demand areas. Reduce reliance on pure concept stocks without near-term profitability.
– Consider increasing allocation to Hong Kong-listed equities as a valuation play and a hedge against potential A-share volatility.
– Monitor currency trends closely, as a appreciating renminbi could boost returns for foreign investors and benefit sectors with foreign currency liabilities.
Ultimately, the question is not if the bull market will end, but how to navigate its matured phase. By embracing the shift from broad beta to specific alpha, and from narrative to numbers, investors can position themselves to thrive even as the underlying logic of China’s financial markets continues to evolve. The journey of capital reallocation is just beginning, and its destination will be defined by those who adapt to the new thesis driving this enduring bull market.