UBS Reinforces Positive Outlook on Chinese Equities
UBS reiterated its Attractive rating on Chinese equities and announced a reshuffle of its Greater China focus list, adding five names it believes are well‑positioned for China’s AI build‑out.
New Additions and Portfolio Weights
The bank allocated a 4.0% portfolio weight to Zhongji Innolight, 3.0% to GDS, another 4.0% to Agricultural Bank of China, and 2.0% each to JCET Group and Innovent Biologics.
Rationale for Selections
Eva Lee, head of Greater China equities at UBS, highlighted robust AI‑driven growth, innovation leadership, and supportive policy trends as the basis for retaining a preference for China’s tech sector. She noted that semiconductor equipment, foundry, AI supply‑chain and internet platforms are positioned to benefit from accelerating monetisation, chip localisation and international capital inflows. Specifically, UBS cited the transceiver business of Zhongji Innolight, noting that AI spending is expanding from pure AI computing chips to connection devices, and referenced Nvidia’s new chip design with embedded co‑packaged optics as an incremental growth source. JCET Group, described as China’s leading outsourced assembly and test firm, is expected to be a major beneficiary of chip localisation.
Stocks Removed and Weight Adjustments
UBS removed China Pacific Insurance, Dongfang Electric, Kuaishou, LONGi Green, New Oriental Education and PICC Property and Casualty from its list. In addition, the bank cut Tencent’s portfolio weight by six percentage points.
Performance Expectation
The bank projects mid‑teens annual returns from Chinese equities by June 2027, favouring semiconductor and AI supply‑chain names over internet platforms.