UBS’ Fang on China Markets, Investment Strategy

Summary

Thomas Fang, UBS Head of China Global Markets, is optimistic on China equities in 2026 after a strong 2025, citing earnings growth, valuation re-rating, policy signals from the first year of the 15th Five-Year Plan, and global diversification demand. He sees MSCI China reaching 100 and the CSI 300 potentially testing its 2007 high. He also highlights consumption stimulus, anti-involution efforts in EV, battery, and solar industries, and Chinese companies' going-global expansion as key themes, while flagging reflation and property sentiment as policy-dependent.

• Fang expects another positive year for China equities, with roughly 10% EPS growth plus valuation re-rating.
• UBS targets MSCI China at 100 and says CSI 300 could test its 2007 high.
• Consumption support and nominal GDP or consumption targets are seen as important policy catalysts.
• Anti-involution is expected to curb price wars and improve profitability in EV, battery, and solar industries.
• Going-global Chinese companies are a key UBS research theme amid US-China tensions.
• Factory-gate deflation is at a tipping point, but Fang wants consistent price momentum and policy follow-through.
• Property weakness remains a consumer concern; Fang sees equity gains as more important for confidence.