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• China equities are no longer a broad beta play
  With performance increasingly divergent across sectors, stock selection and company fundamentals matter more than ever – creating a strong environment for active management.
• The return engine is shifting from re-rating to earnings growth
  From here, we expect EPS growth – driven by company fundamentals and international expansion – to be the primary engine of returns, an important signal for investors wondering whether they have missed the rally.
• Valuations remain compelling relative to other markets
  Chinese equities trade at a significant discount to global peers, and with the economy continuing to narrow the gap with the US, we see the current entry point as attractive for investors to maintain or increase their allocation.
• The next growth driver is international expansion
  As domestic consumption matures, Chinese companies (particularly in manufacturing, EVs, pharmaceuticals and tech) are rapidly gaining global market share, a trend the team sees as a durable, multi-year opportunity.
• AI represents a transformational tailwind
  With China producing approximately one million new engineers annually at globally competitive cost, we believe AI-driven growth will have significant implications across sectors – including internet platforms, industrials and consumer businesses.
• Geopolitical and macro risks are manageable
  China’s reliable supply chain, large strategic oil reserves and competitive manufacturing base are seen as stabilizing factors. The key domestic risk to watch remains the pace of corporate and capital market reform, which – if accelerated – could be a meaningful re-rating catalyst.

If you have questions or would like to discuss how China equities could fit within your portfolio, please reach out to your UBS SA���ʴ�ı contact.