UBS analysts predict a 'Slow Bull' market for Chinese equities. This shift occurs as policymakers push reforms to redirect household wealth from property to stocks. China's A-share market has underperformed global indices for over a decade. The lag stems from structural issues like a focus on financing over shareholder returns and heavy state-owned enterprise weightings.

The property sector's decline as a primary wealth store makes equities strategically important. A sustained stock rise could support the common prosperity agenda and boost confidence in private companies. Regulators are emphasizing dividends, buybacks, and disclosure to attract long-term capital. State-backed buying provides some downside protection during sharp declines.

UBS expects A-share earnings growth to accelerate to about 8% in 2026. Valuation re-ratings are anticipated from stronger earnings, a lower risk-free rate, and continued household savings reallocation. Progress on market reforms and SOE changes will be key. The market gained 6% in 2025, with further gains likely over the medium term.