Eben@CANSLIM ResearchJ.P. Morgan has reiterated its Overweight stance on China equities, keeping end-2026 base-case targets of 100 for the MXCN index and 5,200 for the CSI-300, implying 37% and 16% upside respectively. The bank’s China Equity Strategy report, titled “Innovation Accelerates, Old Economy Stalls,” argues that AI remains a tier-1 growth theme after 2Q26 results, while the old economy continues to lag. Liquidity is described as abundant but not yet back to June’s excessive levels, and policymakers’ moves to balance equity issuance with buybacks could reinforce the higher-shareholder-return theme in 2H26.
Key Takeaways
- J.P. Morgan maintains an Overweight rating on China equities within its EM/Asia allocations, with an end-2026 base-case MXCN target of 100 and CSI-300 target of 5,200.
- The MXCN base case implies 37% upside and rests on 14% consensus 2026 year-over-year EPS growth; the CSI-300 base case implies 16% upside on 24% consensus EPS growth.
- J.P. Morgan’s favoured domestic AI supply-chain names are Iluvatar CoreX (H), V-Test (A), JCET (A), AMEC (A) and NAURA (A).
- For diversification, J.P. Morgan’s top non-AI picks include Meituan, Bank of China-H, Bank of Ningbo, CICC-H, Innovent, BYD-H and CR Land.
- J.P. Morgan upgraded Information Technology to Overweight and downgraded Energy to Neutral, while keeping Health Care, Industrials and Materials at Overweight.
Lead Analysis: What the J.P. Morgan China Equity Strategy Report Says
In a report titled “China Equity Strategy — Innovation Accelerates, Old Economy Stalls,” J.P. Morgan analysts Erin Zhang and Tim Huang argue that China’s equity market is being pulled in two directions: an accelerating innovation complex, led by AI, and a still-stalling old economy. The team maintains an Overweight position on China equities within EM/Asia allocations and leaves its end-2026 index targets unchanged.
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