Storyline UBS bullish on Chinese equities, forecasts 4.5% GDP growth for 2026 Recent months have been positive for China’s equity market, with the Shanghai Composite Index surpassing the 4,000-point mark by the end of 2025. Global financial institution UBS expects the rally to continue, forecasting A-share profits to rise by eight percent in 2026. In the first three quarters of 2025, A-share profits grew by 5.5 percent, largely driven by gains in the financial sector. While the projected increase in 2026 may appear more moderate, UBS analysts say growth will be supported by improvements in the real economy. Market observers believe the current rally reflects longer-term structural strengths and policy support, suggesting the upward momentum could be sustained. Neil Hosie, Global Head of Execution Services, Global Markets, UBS: "The supportive policies that are coming, obviously, it's the 15th Five-Year Plan, and I think we're very excited about what that means, and the technology side, equally I think, when it comes to biotech, there's a lot of excitement. Clearly there's always been a lot of interest in EVs, the brands becoming global, Chinese brands. I live in London. You can't go anywhere without seeing Chinese electric vehicles and Chinese mobile phones. So I think that the potential for continued growth is real." Beyond equities, UBS also forecasts China’s GDP to grow by 4.5 percent in 2026. While lower than the rapid growth seen in previous years, economists describe the pace as solid and sustainable for a large and complex economy. They note that challenges remain, particularly in boosting domestic consumption and stabilizing the property sector, but maintain a generally positive outlook. Massimiliano Castelli, Head Global Strategy, Global Sovereign Markets, UBS Asset Management: "China appears to be pretty resilient to tariffs, which is very good news for China. On the other end, of course China, there are more sort of long-term challenges, which is really about the sort of geopolitical environment. That's one. The second one is more purely economic, and it is really about maintaining this growth between 4 and 5 percent. We currently have a growth forecast of 4.5 percent for 2026. We are confident this can be achieved, but over the medium and long term, these issues will have to be addressed eventually." China’s economy continues to face challenges, including domestic issues such as a weak consumer demand and a struggling real estate sector, as well as external pressures from geopolitical tensions and a softer global demand. Despite all this, economists maintain a positive outlook for the new year, particularly with emerging productive forces playing a key role in driving future growth. [Restrictions: No access Chinese mainland]