A-Share Crash Turning Point: Will 2026 Deliver a Legendary Bull Market?

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The recent sharp decline in A-shares has left many investors confused, with pessimism prevailing across the market. At this moment, the topic of a “2026 bull market” feels both enticing and distant, quickly capturing widespread attention. Market confidence after this A-share crash will take time to rebuild.

Looking ahead to a 2026 A-share bull market is not a fantasy. However, its realization path is full of variables and requires a rational decision-making framework to examine the driving forces and obstacles behind it.

Key Takeaways

• The A-share market in 2026 may welcome a “slow bull” rather than a rapid “fast bull.”
• Corporate earnings growth and policy support are the main forces driving the market upward.
• Real estate and local government debt issues are challenges facing the market.
• Investors should focus on emerging industries like artificial intelligence and defensive high-dividend stocks.
• Market confidence recovery takes time; staggered investing is a better strategy.

Opportunities: What Will Drive a 2026 Bull Market?

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After a deep correction, the market’s pessimistic sentiment is gradually being replaced by rational expectations for the future. Looking to 2026, a potential A-share bull market is not a mirage—several key driving forces exist behind it. These forces are expected to work together to inject new vitality into the market.

Earnings Take Over from Valuation: Fundamentals Become Core

Past market rebounds largely relied on valuation repair. When the market falls to historical lows, cheapness itself becomes a reason for a rise. However, a truly sustainable bull market must shift its core driver from “valuation” to “earnings.” China Galaxy Securities’ research clearly states that the future market will be driven by corporate earnings growth taking over.

The current overall A-share price-to-earnings ratio (PE) is already at the lower end of its historical valuation range, providing a safety margin for long-term investors. This means there is limited room for the market to continue killing valuations. Looking ahead to 2026, as the economic environment improves, listed companies’ profitability is expected to reach an inflection point. At that time, investment logic will return to fundamentals, with companies that have solid earnings growth and core competitiveness leading the market’s sustained rise. Investors need to shift their focus from finding the “next hot sector” to excavating “continuously growing value.”

Policy Push: The Opening Year of the 15th Five-Year Plan

2026 is the opening year of China’s “15th Five-Year Plan.” Historical experience shows that the first year of each five-year plan is often accompanied by clear policy orientation and strong policy support, setting the tone for related industries and overall economic development.

Expected Key Directions of the 15th Five-Year Plan The plan is expected to focus on high-quality development, injecting strong momentum into the economy. Key policy goals may include:

• Building a modern industrial system and promoting industrial structure upgrading.
• Accelerating high-level scientific and technological self-reliance and overcoming key core technologies.
• Strengthening the domestic market and building a strong domestic demand system.
• Expanding high-level opening up to achieve win-win cooperation.
• Optimizing the regional economic layout and promoting coordinated regional development.

These policies will directly benefit sectors related to new quality productive forces, such as artificial intelligence, high-end manufacturing, biotechnology, and green energy. Clear industrial policy support will guide social capital flows, stimulate corporate innovation vitality, and translate into real earnings growth, providing solid fundamental support for the stock market.

Internal and External Demand Resonance: Economy Exiting Deflation Valley

CITIC Securities’ “internal and external demand resonance” view paints an optimistic picture for the macroeconomy in 2026. After several years of adjustment, China’s economy is expected to exit the deflation valley in 2026 and achieve simultaneous improvement in domestic and external demand.

On the domestic demand side, the resilience of the consumer market still exists. Although recent data shows slowing growth, the huge market scale and the long-term trend of consumption upgrading have not changed.

With continued supportive fiscal and monetary policies, household income expectations and consumer confidence are expected to gradually recover. More importantly, price levels are expected to bottom out and rebound.

The narrowing decline in the Producer Price Index (PPI) and the turnaround of the Consumer Price Index (CPI) will significantly improve corporate profit margins and lift the economy from deflationary suppression.

On the external demand side, despite global economic uncertainty, China’s structural advantages in exports remain prominent. As major global economies gradually end their rate hike cycles, overseas demand is expected to recover between 2025 and 2026, bringing new orders to Chinese export companies. The simultaneous warming of internal and external demand will form a joint force to push the economy back to a stable growth track.

New Global Perspective: Overseas Expansion and Foreign Capital Flows

Against the backdrop of reshaping the global economic landscape, the “going global” strategy of Chinese companies and the flow of global capital present new characteristics, which are also important variables in catalyzing a bull market.

On one hand, an increasing number of globally competitive Chinese companies are accelerating their overseas expansion. They are no longer just exporting products but achieving globalization of brands, technology, and capital. These companies can effectively hedge against cyclical fluctuations in the domestic market through growth in overseas markets, showing stronger earnings stability and growth.

On the other hand, for global investors, the valuation attractiveness of A-shares is becoming apparent. With expectations of a shift in Federal Reserve policy and the stabilization of China’s economic fundamentals, the trend of foreign capital returning to the A-share market is worth anticipating.

Data shows that although exports may face pressure in 2026, China’s domestic fiscal and monetary policies still have ample room for expansion, providing a guarantee for economic stability. For investors conducting global asset allocation, the efficiency of managing cross-border funds is crucial. For example, some investors open accounts with licensed Hong Kong banks and then use global payment platforms like Biyapay to conveniently conduct multi-currency fund conversions and transfers, thereby efficiently capturing global investment opportunities including A-shares. The popularity of such financial tools also facilitates foreign capital inflows.

Challenges: Risks and Constraints on the Path to a Slow Bull

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Although the blueprint for a 2026 bull market is full of hope, investors must clearly recognize that the road to prosperity is by no means smooth. A series of profound internal structural issues and complex external environments constitute major challenges. These risk and constraint factors may make the market recovery process slow and tortuous, rather than an explosive surge.

Internal Structural Issues: Real Estate and Debt

Two long-term challenges for China’s economy—real estate market transformation and local government debt—are the Damocles swords hanging over the A-share market. These two issues are intertwined and difficult to resolve completely in the short term.

First, the real estate industry is undergoing profound adjustment. The past “golden era” is over, and the market has entered a painful period of destocking and model transformation. The latest industry data shows the severity of this challenge:

• In October 2025, new home sales by China’s top 100 real estate companies fell sharply by 41.9% year-over-year.
• From 2022 to 2025, new home sales fell at an average annual rate of 23.69%.
• The market experienced a historic low of a 60.00% year-over-year decline in February 2024.

It is worth noting that the relationship between the real estate market and the A-share market is not a simple “seesaw effect.” Research shows that positive shocks to housing prices may instead have a negative impact on the stock market because high housing prices crowd out residents’ funds for buying stocks. Therefore, one cannot simply expect funds from the real estate market to flow directly into the stock market. The deep adjustment of the real estate industry is more likely to pressure the market through affecting financial system stability and overall economic confidence.

Second, the local government debt issue closely tied to real estate is equally unignorable. Local governments’ reliance on land finance and the huge debt accumulated through financing platforms constitute hidden dangers of systemic risk.

• The ratio of Chinese local government debt to GDP soared from 29.4% in 2012 to 70.5% in 2021.
• As of 2021, China’s total government debt reached 103 trillion RMB, accounting for 91% of GDP.

Although the Chinese government has been managing this issue since 2014 through measures such as debt swaps and budget law reforms, the huge stock of debt and declining returns on real estate investment mean that local governments’ fiscal conditions remain fragile. This transformation is painful and necessary, but any bumps in the process may be transmitted to the capital market, suppressing risk appetite. In the recent A-share crash, investors’ concerns about these deep-seated issues also played a role in fueling the fire.

Uncertainty in the External Environment

In addition to internal challenges, the complex external environment adds variables to the future of A-shares. The evolution of the global economic and political landscape will directly affect China’s exports, capital flows, and industrial development.

The Federal Reserve’s policy path is the key “baton” for global capital flows. Although the market generally expects the Fed to enter a rate-cutting cycle, its pace and endpoint remain uncertain.

Meeting minutes show that Fed officials have differences on the pace of rate cuts. If U.S. inflation is stubborn, leading to a slower-than-expected rate cut process, the interest rate differential between China and the U.S. will continue to be under pressure, and the momentum for foreign capital to flow into A-shares may weaken.

Geopolitical risks and trade frictions are another more unpredictable variable.

The global trade landscape is shifting from efficiency-first to security and camp-first. A World Economic Forum survey shows that up to 94% of chief economists expect increased fragmentation in global commodity markets over the next three years.

Specifically, the following risk points deserve high attention:

• Escalation of China-U.S. tensions: Potential new tariffs and technology restrictions may force companies to move supply chains out of China, increasing operating costs and affecting corporate profitability.
• Spreading global protectionism: Economic entities like the EU may impose tariffs on more Chinese goods to protect local industries, forming “gradual protectionism” and compressing the overseas market space for Chinese export companies.
• Supply chain risks: Any conflict in geopolitical hotspots (such as the Taiwan Strait) could cause severe shocks to global key technology supply chains.

These external risks will directly hit investor sentiment, especially when the market is already fragile. An unexpected A-share crash often has the shadow of such macro risks behind it.

The Difficulty of Rebuilding Confidence After the A-Share Crash

After experiencing the previous A-share crash, rebuilding market confidence is a slow and arduous process. This is not only about repairing balance sheets but also repairing investors’ psychological accounts. Confidence is like a mirror—once broken, even if glued back together, cracks remain.

Internal structural pains and continuous external uncertainty together form a “ceiling” suppressing confidence. For ordinary investors, the long-term problems of real estate and debt make them uneasy about economic prospects; unpredictable international relations make them hesitant to hold risky assets.

We can refer to the U.S. market’s experience after the 2008 financial crisis. Although the Fed quickly launched large-scale quantitative easing policies, the true recovery of market confidence took several years. The repair of investor sentiment requires sustained and clear improvement in economic data and the actual landing of risk events.

Therefore, even if A-share valuations are already attractive, “cheapness” itself may not be enough to immediately reverse pessimistic expectations. Before confidence is fully restored, any market rebound may be accompanied by repeated oscillations. Every unexpected A-share crash will deepen investors’ defensive mindset and extend the consolidation time at the market bottom. To push the market out of the gloom, it requires not only timely policy “rain” but also the precipitation of time and substantial improvement in fundamentals.

Looking ahead to 2026, the “bull market” myth of a comprehensive explosive surge in the A-share market is unlikely to materialize. The market is more likely to move toward a “low-volatility slow bull” or “structural slow bull.” The key to success lies in identifying structural opportunities and managing risks well. Investors should follow the market’s trend from extreme growth to balanced allocation and build a more robust investment portfolio.

Suggested Focus on Two Investment Main Lines:

1. New Quality Productive Forces Sectors: Benefiting from policy support and industrial upgrading, such as artificial intelligence (AI), biotechnology, and new materials.
2. Defensive Sectors: Cyclical industries with high dividends and low valuations to provide a safety cushion for the portfolio.

FAQ

Is a 2026 bull market certain?

A 2026 bull market is not a foregone conclusion. It depends on the realization of multiple positive factors such as improved corporate earnings, policy support, and resonance of internal and external demand. Investors should view it as a possibility rather than an inevitability and prepare for risk management.

Since it looks promising, is now a good time to bottom-fish?

Market confidence rebuilding takes time, and the bottom area may oscillate repeatedly. For long-term investors, current valuations provide a good opportunity for staggered layout. However, short-term chasing risks are high, and it is not advisable to invest all funds at once.

What directions should investors focus on for the 2026 rally?

It is recommended to focus on two main lines.

1. New quality productive forces sectors representing the future direction, such as artificial intelligence and high-end manufacturing.
2. High-dividend, low-valuation defensive cyclical industries to balance portfolio risk.

If a bull market comes, will it be a comprehensive explosive “fast bull”?

Unlikely. Given China’s structural challenges and external environment uncertainty, the market is more likely to exhibit a low-volatility, structural “slow bull” characteristic. A broad rally is difficult, and opportunities will be more concentrated in specific high-quality sectors.