Ideas
China equities offer earnings and policy upside
After a strong 2025, Fang remains optimistic on China equities because of roughly 10% EPS growth, valuation re-rating, and policy tailwinds in the first year of the 15th Five-Year Plan. He targets MSCI China at 100, implying about 15% upside from around 87, and sees no reason China cannot test prior highs as consumption support, anti-involution, and global investor diversification and underweight reduction help.
Anti-involution can lift China profitability
Anti-involution policy is a key 2026 theme: Beijing wants to stop the race to the bottom and price wars in industries such as EVs, batteries, solar, and AI. If supply-side discipline is implemented alongside consumption stimulus, corporate profitability should improve, and investors expect visible results this year.
Chinese going-global stocks have growth runway
The going-global theme is important: Chinese companies are building factories and investing abroad, creating jobs and capacity in major markets. This can reduce trade tensions and open large markets like the US and Europe, making outbound-expansion stocks a key UBS research theme.
China tech and biotech trends persist
Ermotti says global investor interest in China is returning and the secular trend supporting China through growth and innovation in technology and biotech is here to stay, even as foreign investors remain underweight and capital flows both into and out of China.
Asia offers cheaper alternative to US assets
Asia is an attractive alternative to US dollar assets: parts of Asia are relatively cheap versus US valuations, local policy and corporate stories are positive, and China, Taiwan, Japan, and Korea all offer AI exposure. Money is looking to come into the region on valuation and local catalysts.
China small caps show broad market strength
Chinese small caps are exceptionally strong, with CSI 2000 and STAR 50 gains much more spectacular than major indices. This shows money is filtering down to broader parts of the market, a healthy sign of broader Chinese equity participation.
Japan snap election supports equities
Japanese equities are supported by the timing of potential snap elections. Prime Minister Takaichi is seen as Abe-like and pro-growth, likely to spend to support the economy and exporters, keep the yen relatively weak, and aim to boost the equity market; the next few weeks look supportive for stocks.
Treasury curve may steepen on Fed risk
Fed independence concerns are likely to play out in a steeper US Treasury yield curve. If that develops over coming days, investors will get more worried, and the move may be hard to dial back as the Fed meeting approaches with little chance of a cut.
US equities vulnerable to steeper yield curve
A steeper Treasury yield curve would not help the US equity market, and US equities are not positioned for that outcome. Cranfield calls this a potential pain trade for US equities.
Tactical US dollar strength on yields
In the very short term, rising US yields can support the dollar, and dollar-yen is already on a climbing path that could pull other currencies with it. He sees tactical US dollar strength.
Baidu can unlock full-stack AI value
Baidu is sitting on historical technology assets and balance-sheet value that management is working to unlock. Its full-stack AI position across foundation models, applications, cloud, Robotaxi, and Kunlun chips is showing monetization: AI cloud growth, search AI transformation, over 250k weekly Apollo Go rides, and a potential chip-unit IPO at a fair valuation. He argues Baidu's closed-loop full-stack model gives it a unique competitive advantage.
China AI full-stack firms are sustainable
China's AI ecosystem has advantages the US lacks in some areas: the power and grid infrastructure has already been built, and Chinese mobile internet accumulated vast data. Companies with a closed loop across data, models, computing power, and applications will be sustainable, so the China AI buildout is not just a bubble.
EU pricing deal helps Chinese EV makers
Brussels is proposing minimum pricing on Chinese EV imports, replacing steep tariffs. This gives Chinese automakers clarity on how to keep selling into the large European market, could help margins and sales, and removes an overhang; European consumers are already buying Chinese EVs and hybrids heavily. Automakers still need to submit proposals and the EU must accept them, but the direction is positive.
US dollar strengthens on resilient fundamentals
Zhang is contrarian bullish on the dollar: December's euro rally was driven by one-off flows; US fundamentals look resilient on payrolls, claims, and unemployment, and inflation may firm as shutdown distortions fade. She expects Fed cuts delayed to June and December and sees the AI-related capex cycle supporting dollar strength, targeting a 2-3% dollar rise by year-end.
Chinese yuan weakness is non-consensus call
Zhang has a non-consensus weak-yuan call. Chinese exporter dollar selling seasonally slows before Lunar New Year, while the PBOC may discourage speculative long-yuan positions and state banks may buy dollars. A roughly negative 2% US-China rate differential makes long yuan costly, and weak Chinese fundamentals, low inflation, supply-chain relocation, and lack of high-quality onshore assets favor a weaker yuan. She also expects a stronger dollar, adding to USD/CNY upside.
This Bloomberg Markets video, published January 13, 2026,
features Thomas Fang, Sergio Ermotti, Mark Cranfield, Henry He, Danny Lee, Lemon Zhang
discussing MCHI, CSI 300, China anti-involution beneficiaries, Chinese going-global stocks, China technology and biotech, AAXJ, CSI 2000, CQQQ, EWJ, TLT, SPY, USD, USD/JPY, BAIDU, China AI full-stack companies, Chinese EV makers, CNY.
15 trade ideas extracted by AI with direction and confidence scoring.
Speakers:
Thomas Fang,
Sergio Ermotti,
Mark Cranfield,
Henry He,
Danny Lee,
Lemon Zhang
· Tickers:
MCHI,
CSI 300,
China anti-involution beneficiaries,
Chinese going-global stocks,
China technology and biotech,
AAXJ,
CSI 2000,
CQQQ,
EWJ,
TLT,
SPY,
USD,
USD/JPY,
BAIDU,
China AI full-stack companies,
Chinese EV makers,
CNY
