Assessment of the Sustainability of A-Share Corporate Earnings Improvement Theme in 2026 and Three Investment Directions

• Multiple institutions have provided clear 2026 A-share earnings growth ranges and central values:
  • JPMorgan Chase: MSCI China Index constituents are expected to see earnings growth of approximately 9%–15% in 2026, with new economy sectors such as AI and high-end manufacturing likely to exceed 20%[2]
  • UBS: Overall A-share earnings growth will rise from approximately 6% in 2025 to around 8% in 2026, with core drivers being narrowing PPI declines and ‘anti-involution’ improving profit margins[2]
  • Goldman Sachs: The central earnings growth rate for 2026–2027 is 14% and 12%, respectively, and it emphasizes that the shift from valuation repair to earnings realization is an important condition for the market’s driving force transition[2]

• Price signals: CPI rose by +0.7% YoY in November 2025, increasing for three consecutive months, and core CPI remained above 1%, reflecting the support of a mild inflation environment for earnings pricing[3].
• PPI and manufacturing profits: Narrowing PPI declines are beneficial to revenue and profit margin improvement for industrial enterprises, especially in the mid-upper stream and manufacturing chain[2].
• Service industry/consumption structure: Web searches show that the growth rate of service consumption (tourism, travel, experience-based spending) is significantly higher than that of goods consumption, reflecting the structural shift of consumption toward services and experiences, which is conducive to improving revenue quality in related sectors[1].
• Industrial supply-demand clearing: Industries that have experienced price wars, such as refining and chemical, photovoltaic, and lithium battery, showed signs of capacity constraints and profit margin repair in 2025 (see the ‘anti-involution’ case later)[2].

• External demand and trade environment: Tariffs, trade frictions, and fluctuations in overseas demand will directly affect the order rhythm and profit elasticity of export chains and overseas enterprises[2].
• Real estate chain drag: Real estate investment and sales are still bottoming out, and their transmission to local finance, upstream and downstream industrial chains, and residents’ wealth effect remains a key variable[2].
• Policy rhythm and implementation: The rhythm of fiscal expansion, the landing of stable real estate measures, and the intensity of monetary coordination determine the time window and slope of ‘earnings realization’[2].
• Valuation and sentiment: MSCI China’s PE of approximately 10x is still below the five-year average, indicating room for valuation repair, but if earnings fall short of expectations, valuation repair alone cannot support the market[2].

: On the path of ‘earnings improvement’, if PPI/CPI rise moderately, policies continue to support, and industrial supply-demand patterns continue to optimize, the 2026 earnings growth recovery has a verifiable central value. However, it is necessary to dynamically track the four major risk points mentioned above and verify the realization of profit margins and revenue elasticity in quarterly financial reports[0][2][3].

• Macro structure: In total retail sales, service consumption growth is faster than goods consumption; tourism (domestic/outbound/inbound) shows double-digit growth, reflecting the structural shift from goods to services/experience-based spending[1].
• Policy continuity: Policies such as trade-in and consumption promotion, as well as scene recovery (cultural tourism, travel), are expected to continue, forming support for service consumption demand[1].

• Disposable income and employment: Youth employment pressure and income repair rhythm restrict the slope of consumption upgrading, and there are uncertainties in the volume and price elasticity of service consumption[2].
• Valuation and performance differentiation: Valuations in some sub-directions are not low, and the rhythm of individual stock performance verification and earnings realization will determine whether a main-line market can emerge.

• Preferred directions: Cultural tourism, travel, leisure services, education/sports, local life platforms, and other fields with ‘scene recovery + policy support + penetration space’[1].
• Verification points: Quarterly revenue/profit margin repair, passenger flow and per capita consumption data, policy intensity and continuity of fiscal subsidies.
• Portfolio positioning: As a structural enhancement in the portfolio, not the only main line, forming hedging and complementarity with CPI-related assets and anti-involution themes.

• CPI and core CPI have risen continuously, and core CPI >1%, indicating that the price environment is improving[3].
• Implications for corporate earnings: Nominal GDP recovery and deflation pressure relief are beneficial to consumer goods and necessities with strong pricing power, brand premium, and cost pass-through capabilities.

• Direct beneficiaries: Food and beverage, condiments, some dairy products, seasonings and basic consumer goods (with pricing power and channel strength)[3].
• Constraint factors: Raw material cost fluctuations, channel inventory and competition patterns, sustainability of consumption frequency and per capita consumption[3].

• Layout ideas: Prefer industry leaders with ‘necessities + brand power + channel control’, pay attention to the stability of gross profit and expense ratio; moderately focus on cyclical products benefiting from inflation and cost pass-through capabilities (such as some agricultural materials, upstream materials)[3].
• Verification points: Continuity and structure of CPI and core CPI (service items vs food items), quarterly gross profit and price transmission data of listed companies, policy support intensity.

: If CPI rises moderately and service items are stronger than food items, and profit margin improvement of leading companies is verifiable, then CPI-related assets have the foundation to become one of the main lines, but the main-line attribute needs to be confirmed synchronously with the earnings verification cycle[3].

• ‘Anti-involution’ in the investment context should be strictly understood as: In industries that have experienced vicious price wars and disorderly competition, policies strictly control new capacity, quotas and access are concentrated on leading enterprises, backward capacity is cleared, driving the industry competition pattern from ‘involution’ to ‘oligopoly/concentration’, thereby improving profit margins and earnings quality[2].
• Coverage areas: Refining and chemical, photovoltaic, lithium battery, some chemical and mid-stream materials, and other cyclical and manufacturing industries with optimized supply patterns[2].

• Refining and chemical: In 2026, crude oil import quotas are concentrated on large enterprises, leading enterprises obtain main quotas, and small local refineries have almost no share, reflecting ‘capacity concentration + supply optimization’[2].
• Photovoltaic/lithium battery: Leading companies in related industries have seen profit margins start to recover, and the industry has entered a pattern repair stage of ‘capacity clearing + technology upgrading + leading share increase’[2].
• Policy signals: Departments such as the Ministry of Industry and Information Technology strictly control new capacity, local governments eliminate inefficient devices, and promote the industry to evolve toward scale and intensification[2].

• Preferred directions: Sub-track leaders (with cost, technology, channel, and capital advantages), industries with clear capacity clearing, and leaders in industries where supply and demand enter a tight balance or repair cycle[2].
• Risks: If downstream demand weakens, capacity clearing is not thorough, or policy implementation intensity is less than expected, the rhythm of profit margin repair will slow down.
• Portfolio positioning: Prioritize layout of ‘anti-involution’ sub-track leaders in cyclical/manufacturing positions, forming style hedging with consumption/services.

: Under the premise that supply-side constraints and leading enterprise profit margin repair are verifiable, the anti-involution theme has the conditions to become a structural main line, but its main-line attribute is highly dependent on the verification of capacity clearing rhythm and demand stabilization.

• AI infrastructure investment remains highly prosperous (optical modules, computing chips, liquid cooling, etc. have full orders and a high proportion of overseas demand)[2].
• However, valuations are no longer cheap, some tracks are crowded in trading, and are highly sensitive to performance realization.

• Technical routes and order rhythm: Marginal changes in a single technical route, overseas capital expenditure rhythm, geopolitical policies, and export restrictions will bring fluctuations in orders and performance.
• Sentiment and valuation: When performance falls short of expectations or sentiment weakens, there is greater pressure for valuation correction.

• Style allocation: Moderately control exposure to a single AI direction, and pay attention to ‘earnings realization’ capabilities and order transparency.
• Portfolio hedging: In AI infrastructure and application directions, prefer leaders with performance certainty and global competitive barriers, and conduct style hedging with service consumption/CPI-related assets[2].

• January–March 2026: Policy and Two Sessions window (fiscal intensity, refinement of stable growth and industrial policies)[2].
• April–June 2026: Annual report and first-quarter report verification period (confirmation of inflection points in earnings growth and profit margins)[2].
• July–September 2026: Mid-year policy assessment and mid-year report verification (policy correction and earnings revision)[2].
• October–December 2026: Fourth-quarter policy加码 and hedging, outlook for external demand and export chains[2].

Note: The above nodes are common policy and financial report verification windows, and the specific rhythm needs to dynamically track policy announcements and macro data.

• Corporate earnings improvement main line
  : If PPI/CPI rise moderately, policies continue to support, and industrial supply-demand patterns continue to optimize, the 2026 earnings growth recovery has a verifiable central value; but the main-line attribute depends on quarterly earnings verification and macro environment coordination[0][2][3].
• Service consumption
  : Has structural opportunities (tourism, travel, local life, etc.), more suitable as a structural enhancement in the portfolio rather than the only main line; need to pay attention to the rhythm of employment and income repair[1].
• CPI recovery-related assets
  : In an environment of mild inflation and core CPI >1%, consumer goods leaders with pricing power and brand strength are expected to benefit, and the main-line attribute needs to be confirmed synchronously with the earnings verification cycle[3].
• Anti-involution theme
  : In directions where supply clearing and quotas/access are concentrated on leaders (refining and chemical, photovoltaic, lithium battery, etc.), it has structural main-line potential, but needs to strictly define the industry scope and verify the clearing rhythm[2].
• AI-related assets
  : Fundamentals remain prosperous but volatility risks rise; should moderately control exposure, prefer leaders with strong earnings certainty, and conduct hedging allocation with other themes[2].

• Macro: CPI/PPI/core CPI, total retail sales and service consumption growth, manufacturing/industrial enterprise profit margins.
• Industry: Sub-industry capacity utilization rate, price index, changes in market share and gross profit margin of leading companies.
• Company: Quarterly revenue/profit margin repair, order visibility, capital expenditure and capacity deployment rhythm.
• Policy: Fiscal expansion rhythm, landing and effect evaluation of stable real estate and consumption promotion policies.
• External: External demand and trade policies, overseas capital expenditure and AI industry chain prosperity.

[0] Jinling API Data (Broker API)
[1] McKinsey Analysis of the Chinese Market (Service Consumption and Consumption Structure Changes) [https://hk.finance.yahoo.com/news/麥肯錫解析中國市場-解答全球執行長最關心的4大問題與…]
[2] JPMorgan Chase 2026 MSCI China Four Major Themes (AI Infrastructure, Anti-Involution, Overseas Expansion, K-Shaped Consumption) [https://hk.finance.yahoo.com/news/摩根大通看好2026-msci中國指數-ai-反內卷-海外布局與消費復甦四大主題驅動]
[3] CPI and Inflation Recovery (National Bureau of Statistics and Market Interpretation) [https://hk.finance.yahoo.com/news/國統局-物價形勢出現積極變化-工業生產轉型升級有序推進]