UBS Securities believes that the current A-share deleveraging is nearing its end. Driven by profit recovery, continued net inflows from ETFs, insurance, and private equity, and global technology narratives, the A-share market is expected to continue to rebound steadily during the year, but the rebound still faces two major obstacles, pace or sluggish pace. Meng Lei, a Chinese stock strategy analyst at UBS Securities, pointed out in the report that, on the one hand, resistance includes geopolitics, US bond interest rates, and oil price fluctuations that may affect the valuation of interest-sensitive technology sectors through inflation expectations, dollar liquidity, and risk appetite. On the other hand, under the premise that the technology sector has been greatly overtaken, public funds may face potential “capital redemption” after the market rebounds, limiting the room for A-shares to rebound. Total A-share earnings in the second quarter increased 29% year-on-year, faster than in the first quarter due to faster revenue combined with an expansion in profit ratios; total A-share earnings are expected to increase 15% in 2026.

UBS Securities believes that the current A-share deleveraging is nearing its end. Driven by profit recovery, continued net inflows from ETFs, insurance, and private equity, and global technology narratives, the A-share market is expected to continue to rebound steadily during the year, but the rebound still faces two major obstacles, pace or sluggish pace. Meng Lei, a Chinese stock strategy analyst at UBS Securities, pointed out in the report that, on the one hand, resistance includes geopolitics, US bond interest rates, and oil price fluctuations that may affect the valuation of interest-sensitive technology sectors through inflation expectations, dollar liquidity, and risk appetite. On the other hand, under the premise that the technology sector has been greatly overtaken, public funds may face potential “capital redemption” after the market rebounds, limiting the room for A-shares to rebound. Total A-share earnings in the second quarter increased 29% year-on-year, faster than in the first quarter due to faster revenue combined with an expansion in profit ratios; total A-share earnings are expected to increase 15% in 2026.