The Chinese Equity Bull Market Quandary

Gavekal

Louis-Vincent Gave

Research

17 Pages

Gavekal argues that China’s equity bull market remains intact but increasingly fragmented across sectors and styles. Momentum has shifted toward AI hardware, industrials, materials, banks, and high dividend payers, while internet platforms, consumer names, and property remain laggards.

Key Takeaways

Chinese Equities Split: H shares, Hang Seng, and Shenzhen have outperformed by about 25% since January 2024, while ChiNext has been very strong.
FX Tailwind Builds: Renminbi has risen almost 6% over 12 months, turning currency strength into a new hurdle for capital outflows.
Inflation Regime Shifts: China PPI moved from minus 2.4% in October 2025 to plus 2.8% in April, supporting margin recovery and earnings revisions.
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