Market News

(Bloomberg) -- Investors are ramping up bets on China’s stocks and currency as 2026 kicks off, signaling a more decisive shift into the country’s assets at a time of rising global uncertainties.

Global investment firms from Goldman Sachs Group Inc. to Bernstein Societe Generale Group have lifted their assessment of the world’s second-largest equities market, citing compelling valuations, supportive industry policies and a rosy earnings outlook.

As Beijing allowed the yuan to breach the key 7-per-dollar level, market participants are also doubling down on the currency, with some predicting it to rise to as strong as 6.25 this year. Citigroup Inc., BNP Paribas Asset Management and Bank of America Corp. are among those favoring the yuan.

The louder bullish chorus has come as China staged a rare stock and currency twin rally last year, a virtuous cycle that may further restore confidence in the country’s assets. The surprise resilience in some parts of the world’s No. 2 economy, from booming exports to recovering factory activity and a stable banking system, also draws hope that laggards such as property and consumer stocks may deserve another look too.

“A firmer yuan can help equities by improving dollar-based returns and risk sentiment,” said Christy Tan, an investment strategist at the Franklin Templeton Institute. “At the same time, genuine equity inflows, driven by earnings and confidence, can support the currency.”

A key equities gauge of Chinese firms listed in Hong Kong rose over 22% last year, making it one of the world’s best-performing major indexes. The yuan strengthened more than 4% versus the dollar in 2025, its best gain in five years. It marked the first time that the two rallied together since 2017.

Slow Bull

The twin rally has continued into the new year, with the yuan staying stronger than the closely watched 7-per-dollar level and onshore stocks surging to a four-year high.

Bernstein Societe Generale and Goldman were the latest additions to the growing camp of Chinese equities bulls, with the former upgrading the country’s stocks to overweight last week.

The Hang Seng China Enterprises Index currently trades at 10.7 times forward earnings, versus the S&P 500 Index’s 22.3 and the MSCI Asia Pacific Index’s 15.3.