UBS China Equity Strategy: What Over 5,000 A-Share Companies Say About A-Share Earnings
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UBS's China equity strategy team, aggregating results from over 5,000 A-share companies, reports all-A earnings grew 29.4% year-on-year in Q2 2026, sharply faster than Q1's 9.3%, taking first-half growth to 19.5%—far above the prior full-year pace of 2.9%. UBS forecasts 15% all-A earnings growth for 2026.
Margin improvement was a key driver: Q2 non-financial gross margin expanded 141bp to 19.2%, the highest since 2Q21, and net margin 92bp to 6.1%, the highest since 3Q22, alongside 9.8% revenue growth. Non-financials and financials grew 26.9% and 32.3%; ChiNext earnings rose 42% and the STAR Market 370% (105% excluding CXMT), while AI-linked electronics jumped 234% and computers 46%. Nonferrous metals, coal, oil & petrochemicals, and chemicals grew 102%, 67%, 59%, and 58% on higher prices, supply constraints, AI/new-energy demand, and low bases.
With deleveraging largely complete, UBS expects a steady but slow grind higher, supported by earnings recovery, inflows from ETFs, insurers and hedge funds, and the global tech narrative—tempered by US Treasury yield and oil volatility pressuring rate-sensitive tech valuations, and possible mutual-fund redemptions once funds break even. UBS is overweight electronics, telecom, machinery, nonferrous metals, chemicals, power equipment, and non-bank financials.