As the benchmark Shanghai Composite Index finished above the 4,000-point level on the first trading day of 2026, the upward momentum is likely to continue in the A-share market throughout the year, which is backed by self-reliant technology advancement and continued recovery in economic fundamentals, said experts on Monday.
Their comments came after the benchmark index closed 1.38 percent higher at 4,023.42 on Monday, while the Shenzhen Component Index gained 2.24 percent. The tech-heavy ChiNext board in Shenzhen jumped 2.85 percent. Combined trading value at the Shanghai and Shenzhen exchanges totaled 2.5 trillion yuan ($360 billion), up 500 billion yuan from the previous trading day.
Insurance companies reported the strongest rally on Monday, surging 6.72 percent on average. The semiconductor sector also jumped 4.18 percent.
Experts from China Galaxy Securities explained that the recent rally in the Hong Kong market, which occurred during the New Year holiday break of A shares, coupled with the recent strengthening of the renminbi in the foreign exchange market, has boosted investor confidence.
Analysts from Founder Securities said that breakthroughs to be anticipated in emerging industries — such as commercial spaceflight, artificial intelligence, brain-computer interface and nuclear fusion — will further propel the A-share rally as 2026 plays out.
Foreign institutions hold a positive outlook on the A-share performance this year.
Goldman Sachs' chief China equity strategist, Kinger Lau, and his team wrote in a report in late December that China's major indexes still have room for 38 percent growth by the end of 2027, with companies' improving profitability to be a major driver.
Meng Lei, a China equity strategist of UBS Securities, said that profitability growth, which came at 6 percent in 2025, is likely to further rise to 8 percent this year.
UBS Global Wealth Management Chief Investment Office wrote in a note at the end of 2025 that about 7 trillion yuan of Chinese household excess savings may flow into the stock market this year, sustaining the upward trend.
JPMorgan said in a forecast that the CSI 300 Index, which monitors the 300 A-share heavyweights, may touch 5,200 points at the end of this year. Morgan Stanley sets a target of 4,840 points for the same index, which stood at 4,717.75 points on Monday.
According to experts from Shenwan Hongyuan Securities, the readings of China's purchasing managers' index in December grew beyond seasonal improvements, which further trims the downward possibility of the A-share market this coming spring.
The A-share market will prepare itself for an overall bull run this year. The RMB's recent stronger-than-expected appreciation has strengthened the global market's understanding of the competitiveness of the Chinese manufacturing sector, which may trigger the accelerated return of foreign capital into A shares, they said.
Zhang Xia, chief strategy analyst at China Merchants Securities, said that the odds are high for the A-share market to stage a bullish performance this spring. The issuance of local government special bonds and central budgetary investments are likely to speed up." Government expenditure and investment data are likely to improve, which will lead to marginal recovery in economic fundamentals," Zhang said.
Xia Fanjie, a strategist at CSC Financial Co Ltd, said that market liquidity and foreign exchange performance during this year's New Year holiday were significantly better than during the previous two years. The amiable external market may lead to an A-share bull shortly after the holiday.
The overall relaxed credit environment in China is conducive to extending the bullish performance for a longer period. Investor sentiment remains high. Opportunities may be churned out in industries with higher industry prospects, including nonferrous metals and AI, as well as hot market topics such as commercial spaceflight and nuclear power, Xia said.
The Shanghai Composite Index jumped 18.3 percent in 2025, while the Shenzhen Component Index surged 30.62 percent. The ChiNext spiked 51.42 percent last year.
Qiu Xiang, chief A-share market strategist of CITIC Securities, said a noticeable structural bull took shape in the A-share market last year.
The market has reevaluated China's self-reliant technology capabilities, the resilience of external demand amid a complicated global trade environment and the surging demand for AI reasoning. While upward momentum is a major theme, fluctuations may not be avoided in the A-share market as the new year begins, Qiu said.
