A visitor takes a photo with a humanoid robot developed by China's Unitree Robotics during the Web Summit annual tech conference held in Lisbon, Portugal, on November 11, 2025. Photo: VCG

Foreign financial institutions are bullish about China's capital market in the new year, eyeing sectors ranging from artificial intelligence (AI) to e-commerce, as the country's A-share market ended the first trading day of 2026 with a 1.38-percent gain.

On January 5, the A-share market welcomed the first trading day by extending its winning streak, continuing a trend that began in late December.

The benchmark Shanghai Composite Index rose 1.38 percent to close at 4,023.42 points on Monday, while the Shenzhen Component Index closed 2.24 percent higher at 13,828.63 points. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 2.85 percent to close at 3,294.55 points.

Monday's gain followed a strong year in 2025, during which the Shanghai Composite Index rose 18.41 percent, marking its best annual performance since 2020. The Shenzhen Component Index and the ChiNext Index gained 29.87 percent and 49.57 percent, respectively, according to the Shanghai Securities News.

Looking ahead to 2026, bullish sentiment toward Chinese assets, particularly Chinese technology companies, has become a consensus among both domestic and foreign institutions. Ample liquidity and market sentiment are cited as the primary drivers for a possible bull run.

In a report published on Monday, Goldman Sachs reportedly forecast continued growth for Chinese listed companies, predicting gains of 15-20 percent in 2026 and 2027, citing strength in China's exports sector, a rebound in investment, and policy focus on driving home consumption.

Analysts at UBS Global Wealth Management's Chief Investment Office said in a research note sent to the Global Times on Monday that, after a standout year, the rally in the Chinese market is expected to extend into 2026, with advanced manufacturing and technology self-reliance emerging as new growth engines.

"With domestic investors on board and global investors adjusting their stance, we see more upside ahead, even if occasional volatility and geopolitical squalls lie on the horizon," the research note said.

Against a backdrop of low interest rates and relatively limited alternative investment options, approximately 7 trillion yuan ($1 trillion) in excess savings could flow into the stock market, UBS analysts said.

And, analysts at Morgan Stanley said in a research note sent to the Global Times on Monday that the Chinese market will transition from a "leap" in 2025 to "sustainable development" in 2026. 

"Following high returns in 2025, 2026 will be a year of stabilization, with limited upside in index performance, moderate earnings growth, and valuations stabilizing at higher levels," the research note said.

"Against the backdrop of China regaining its footing in the global tech race, and easing trade tensions, fundamentally and thematically-driven stock selection remains the key. We expect onshore and offshore markets to perform broadly in line with each other," Morgan Stanley analysts said.

Analysts noted that as China's economic landscape keeps transforming, global investors see opportunities in a number of sectors with China's economic and technological strengths and proactive policy approach.

The Recommendations of the Central Committee of the Communist Party of China for Formulating the 15th Five-Year Plan for National Economic and Social Development, released in October 2025, emphasized developing new quality productive forces, including advanced manufacturing, AI, aerospace, renewable energy, and quantum technology.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Monday that it is not surprising that international investors would be positive on Chinese assets in 2026.

Global investors, though still selective, have fundamentally changed their view on Chinese assets since the second half of last year, with the Chinese economy acting as a stabilizing force of the global economy, with a number of sectors from green techs to high-end manufacturing to biomedicine playing a globally leading role, Dong said.

As the Chinese government ramps up R&D investment to promote technological self-reliance, UBS analysts predict overall R&D spending is projected to achieve a compound annual growth rate of around 7 percent by 2030, raising its share in the GDP to 3.2 percent, to be led by R&D in cloud computing, AI, e-commerce, digital infrastructure, and more.