One of the buzz phrases to summarize the A-share market performance of 2025 would be, "10-year high", as the benchmark Shanghai Composite Index rose consistently through the year, even breaching the 4,000-point level at one point.
Market activity has remained high in the past year.
As of end-November, the A-share market recorded four trading days with respective daily trading values exceeding 3 trillion yuan ($430 billion). There were 91 trading days when the daily trading value stood above 1.5 trillion yuan.
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The A-share market's total trading value topped over 410 trillion yuan in 2025, up more than 60 percent from a year earlier and breaching the 400-trillion-yuan level for the first time. At least 528 companies saw their share prices double in 2025, while only 125 companies made the achievement one year earlier, according to market tracker Wind Info.
Despite some short-term ups and downs, the consensus opinion among analysts is that a slow bull run is taking shape in the A-share market.
Boosted by a surge in Chinese artificial intelligence companies, with DeepSeek serving as the best example, technology firms have undoubtedly been the major contributors to the upward trend.
The STAR Market 50 Index, which monitors the fluctuations of the 50 heavyweights trading at the STAR Market on the Shanghai bourse, saw its maximum increase within 2025 topping 80 percent. Shares of Moore Threads, a Beijing-based graphics processing unit company often referred to as "China's Nvidia", soared by over 400 percent on its debut at the STAR Market.
"These are the result of policy guidance, optimization of capital structure and industrial transformation," said Chen Li, chief economist of Chuancai Securities.
The good news is, the bullish trend is likely to carry on in the following months, underpinned by continued technology advancements and the ongoing institutional reform of the Chinese capital market.
Equity strategists from JP Morgan wrote in a 2026 outlook that the CSI 300 index, which tracks the 300 A-share heavyweights, is likely to gain 12 percent in 2026. The MSCI China Index — which captures large — and mid-cap representation across onshore and offshore Chinese equities — may rise 18 percent by the end of 2026.
Global growth and the pricing system will show increasingly noticeable nonlinear characteristics. The rhythm of economic cycles will become more uneven and policy changes will exert greater impact on asset prices at a faster pace, said Cheng Shi, chief economist at ICBC International Holdings Ltd.
This means, asset allocation will become more complicated from a global perspective. But the silver lining is that emerging markets, especially China and India, may outperform developed markets in 2026 thanks to the former's industrial adjustment and recovery in market valuation, Cheng said.
Experts from asset manager Aberdeen Investments said that there may be more attractive investment opportunities in China in 2026, thanks to its valuation and various structural supportive factors.
A few large US tech stocks have dominated the returns of the global stock market. Although this has resulted in robust returns, risks are also latent due to the rising market concentration and overvaluation, they said.
Therefore, the diversification of source of returns has started. The transfer of capital from the US stock market to more valuable destinations may be one key investment theme in 2026, they added.
Data from the Institute of International Finance show that up to $50.6 billion of capital flowed into the Chinese stock market in the first 10 months of 2025, while the whole-year figure was only $11.4 billion a year earlier.
According to Shi Bin, head of China equities at UBS Asset Management, global investors, including long-term funds and hedge funds, are actively participating in cornerstone investments and secondary market trading in Chinese stocks. Most foreign investors are now tapping into the Chinese market via exchange-traded funds, which means that the A-share market is still at the "technical recovery" phase.
"The valuation of Chinese stocks is far from 'overheated'. Improving fundamentals and high-quality growth will be the major drivers of A-share market performance in the following months," he said.
Allen Lee, head of China business development at asset manager AllianceBernstein, explained that profitability growth will lead to the bullish performance of the A-share market in the long run. The central government's emphasis on technology innovation and high-end manufacturing, which can be seen from the proposal for the 15th Five-Year Plan (2026-30) period, will be translated into positive impact on the A-share market in the long run.
"Experiences from mature markets show that 'disruptive innovation' will nurture companies with highly efficient operational models and global competitiveness. We can thus infer from the proposal that supervision will continue to be relaxed over private companies, which are the major drivers of innovation. This means that private enterprises will benefit more from their investment in research, technology breakthroughs and innovation of business models. All these will be transformed into more stable profitability growth," he said.
"To shape a structurally upward equity market, companies' steadily improving profitability is considered as the sufficient and necessary condition. The emphasis on companies' efficiency and business models to be underlined during the 15th Five-Year Plan period has laid the groundwork for improving profitability," Li added.
Niamh Brodie-Machura, chief investment officer for equities at Fidelity International, said she believes that the Chinese stock market will demonstrate "great potential" in the coming years, with the leapfrog of AI and companies' increasing deployment of this emerging technology leading to an overall inflection in profitability.
"The performance gap between the best AI models coming from the United States and China is not increasing, but actually decreasing," she said, noting that China's capital expenditure on AI, which has been rising quickly, is only a fraction of the level in the United States.
She cited a recent comment by Nvidia's CEO Jensen Huang to the Financial Times, in which he said that China will win the AI race because of its lower energy costs and that the country is able to produce fantastic products at lower prices — the latter serving as a winning strategy.
More importantly, there is an "amazing innovative pulse" in China, which Fidelity finds more broadly in the Chinese economy. Therefore, the asset management company "finds a lot to like in China", she said.
"As a matter of fact, Chinese entrepreneurs have never hibernated, even during the bitterly cold market conditions over the past five years both at home and abroad. This has been reflected in the surge of leading Chinese companies in the realms of AI, smart vehicles, humanoid robots and biomedicine, which is especially noticeable since the end of 2024," said Robin Xing, chief China economist at Morgan Stanley.
"Domestic asset managers, international investors, pension funds and sovereign wealth management funds have thus shown greater interest in Chinese equities," he said.
With three years of exponential growth, the AI sector will enter the phase of industrial application in 2026, said experts from China International Capital Corp Ltd. Computing power, optical modules and cloud computing companies may still churn out investment opportunities, but investors should direct more attention to those focusing on localization, they said.
Innovative drugs, energy storage, and solid-state batteries are also seeing rising prosperity, they added.
Boosting consumption will be one major mission for China in 2026, said Huang Wentao, chief economist of China Securities. Efforts will be made to further stimulate domestic demand, which is crucial to consolidate economic growth. Against that backdrop, the overall consumption scale and quality will increase, which can lead to bullish performance in the A-share consumption sector.
Yu Xiangrong, chief China economist at Citi, expects more structural measures to be adopted in China in 2026. The trade-in program will retain its size at around 300 billion yuan, while applicable categories will be expanded and more rural areas will be included.
Specifically, China's ongoing K-shaped consumption recovery may continue to benefit the food and beverage as well as high-end luxury sectors, according to a report from JP Morgan.
Experts from Industrial Securities said that leading consumer electronics companies may benefit from the recent AI boom, especially those making AI phones and AI glasses.
Favorable policies will be extended to the service-based consumption sectors such as tourism, catering, healthcare and elderly care. Market entry in the service industry will be further relaxed and unreasonable limits on purchases will be removed. These will help to release once suppressed consumption potential, further advancing recovery in domestic demand, said Xue Hongyan, deputy director of Star Atlas Institute of Finance.
However, he noted that the recovery in residents' consumption willingness is largely dependent on the rebound in the job market and the stabilization of income expectations.
Therefore, active fiscal policies and moderately relaxed monetary policies will continue in China in the next 12 months to address these challenges, he said.
Such a relaxed monetary environment will lower companies' financing costs and gradually elevate people's consumption willingness. Chinese liquor and home appliances are expected to see a sales increase against that backdrop, said experts at JP Morgan.
The A-share market performance will be further buoyed by the higher efficiency of the Chinese capital market, which is inseparable from the continued reforms, said Lee from AllianceBernstein.
The nine measures introduced by the State Council in 2024 to facilitate the sustainable development of the Chinese capital market have encouraged companies to attach greater importance to return on capital. Therefore, companies with a more competitive edge will be entitled to higher valuations. Capital will be used with higher efficiency, he said.
More importantly, the higher efficiency in utilizing capital is likely to address the problem of relatively low inflation in China, according to Lee.
Low inflation, even deflation pressure felt in the Chinese market, has been largely derived from insufficient domestic demand and overcapacity, which is the result of growth models of the past. These have undermined companies' pricing power and their profitability, impairing stock prices to some extent while lowering people's consumption and investment willingness. But all these are likely to be solved by the central government's dedication to improving efficiency, he added.
In an op-ed piece released in People's Daily in December, Wu Qing, chairman of the China Securities Regulatory Commission, wrote that continued efforts will be made to create a market environment for investors and companies to come, stay and seek sustainable growth.
Direct financing methods such as equities and bonds should be further developed to nurture more public companies that reflect China's high-quality economic development. The institutional environment should be more amenable to long-term investment amid more effective market supervision. All these are projected to extend the fruits of China's development to more people, according to the article.
According to Xing of Morgan Stanley, the potential of the Chinese stock market should not be overlooked.
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Institutional investors best represented by insurers and asset managers brought in about 1.5 trillion yuan of incremental capital into the A-share market in the first half of 2025. About 800 billion yuan of household savings have been directed to equity-focused wealth management products since June.
China has, however, accumulated over 30 trillion yuan of excess savings over the past five years. The move toward equity assets in China has only just begun, according to Xing.
"There is more possibility of diversified asset allocations," he added.
