Analysts at US investment bank Morgan Stanley expect Chinese stocks to enter a consolidation phase next year, driven by uncertain corporate earnings forecasts and currently high stock valuations.
Analysts, including Laura Wang, wrote in a note to the bank's clients that the main focus next year will be on maintaining market momentum while dealing with multiple domestic and international factors.
They added that the challenges include the quality and sustainability of corporate earnings, continued deflationary pressures through 2026, and global macroeconomic uncertainty.
The US investment bank set its targets for the Chinese stock market by December 2026, based on the MSCI China index reaching 90 points, the Hang Seng index of Chinese stocks in Hong Kong reaching 9,700 points, and the Shanghai Composite index reaching 4,840 points.
Bloomberg News reported that, according to the bank's report, these targets imply a potential rise of 3 percent, 2 percent, and 4 percent for the three indices respectively, compared to their levels at the close of trading on November 12.
Analysts at the US bank said that 2026 will be a period of stability for Chinese stocks after the high returns during the current year, as the Shanghai Composite Index, the local benchmark in China, has risen by about 17 percent since the beginning of this year, and is on track to achieve gains for the second year in a row, thanks to investor optimism about technological development in the country.
