A-Share Trend | UBS Expects De-risking to Near Completion, Valuations Expected to See Medium-term Recovery

SighingCashier · 2026-03-24T06:45:49+00:00

UBS Securities report predicts that mainland A-shares' "de-risking" is nearing completion, with valuations expected to recover in the medium term. Analysis indicates that rising oil prices have limited impact on aggregate demand, while recent profit expectations have been revised upward. The volatility of major A-share indices remains below levels during last year's trade tensions, with earnings growth projected to reach 8% in 2026. Capital flows remain stable, with broad-based ETF outflows decelerating.

SighingCashier

2026-03-24 06:45:49

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UBS Securities reports that the short-term “de-risking” of A-shares in mainland China may be nearing an end, with valuations expected to recover in the medium term. The impact of rising oil prices on overall demand and profit margins remains to be seen, but recent earnings consensus forecasts have been upwardly revised.

UBS Securities China Equity Strategist Meng Lei stated in the report that from a macro perspective, China’s reliance on oil and natural gas is relatively low among major global economies. The short-term surge in oil prices appears to have limited impact on the main indices of the A-share market.

He pointed out that the implied volatility of major A-share indices is lower than during the global trade conflict escalation in April last year, as well as compared to other major overseas indices. Under the baseline scenario, the firm expects the earnings growth rate of all A-shares to increase to 8% by 2026. Considering incremental macro policies, sparks of technological innovation, ongoing reforms in the capital market and market capitalization management, A-share valuations are likely to recover in the medium term.

The report states that despite recent market corrections, financing balances have not significantly decreased. The 55 to 60 trillion yuan in deposits maturing this year are expected to indirectly participate in the A-share market through channels such as insurance and wealth management products. Net capital outflows from broad-based ETFs have ceased since February.

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