Banks cite China’s AI sector expansion and low oil dependency as key drivers for equities reaching an 11-year high.
UBS and Morgan Stanley have upgraded their outlook on Chinese equities, highlighting earnings recovery and AI-driven growth. The Shanghai Composite surpassed 4,200 points, its highest level in 11 years, as China’s Q1 GDP growth beat forecasts at 5% year-on-year.
China’s power sector relies on oil and gas for just 3% of its needs, compared to a global average of nearly 20%, providing a buffer against oil price volatility. UBS noted increased interest from sovereign wealth funds and pension funds, treating Chinese assets as a safe haven within global portfolios.
Morgan Stanley projected China’s semiconductor self-sufficiency to rise to 86% by 2030 from 41% last year. The bank estimated AI could boost China’s total factor productivity by 3 percentage points and lift GDP by 3.5 points by 2035.