Lianbo Fund Zhu Liang: Corporate profits in 2026 are expected to become the dominant factor in the A-share market

Since 2026, A-shares have been steadily strengthening. Zhu Liang, Deputy General Manager and Investment Director of Lianbo Fund, predicts that corporate profit growth is expected to become the dominant factor in the A-share market in 2026, which means active stock selection ability will be crucial. Against the backdrop of economic restructuring, the release of private sector vitality, and continuous improvement in corporate governance, adopting a balanced allocation strategy that considers dividend assets and thematic assets representing future growth momentum might be a good choice.

Zhu Liang stated that whether it is the US S&P 500 index or China’s CSI 300 index, the main source of long-term returns is the growth of corporate earnings (EPS), rather than pure valuation expansion. However, in the past, profit growth in the A-share market has not fully reflected the growth of the economic scale.

Zhu Liang believes that the A-share market will enter a critical growth phase. During this phase, the market’s focus will shift from valuation to corporate profitability, and investors should pay more attention to the fundamentals of companies.

Looking ahead to 2026, Zhu Liang thinks the focus should be on the performance of the capital market under China’s transformation opportunities:

In the consumer sector, an era emphasizing emotional value and instant gratification—“small happiness”—is emerging, characterized by “light spending, high feedback.” This has led to a surge in demand for niche markets, often met by private enterprises. Therefore, small and medium-sized private companies may present promising consumer investment opportunities.

China’s export structure is upgrading toward higher value-added products, which will help drive corporate profit growth and may serve as an “amplifier” for earnings per share (EPS). Meanwhile, the increasing proportion of overseas revenue among listed companies helps diversify revenue sources and stabilize profit fluctuations.

The steady implementation of policies to “counter internal competition” will promote continuous improvement in corporate profitability. Additionally, the deepening trend of Chinese companies going global will also be an important support for profit growth.

Looking at the future market, Zhu Liang suggests paying attention to two types of assets:

The first type includes long-duration assets, such as some dividend assets and companies with stable revenue. Drawing on experience from mature markets, companies that improve corporate governance and increase dividends and buybacks to enhance shareholder returns (Value-up) are highly attractive to foreign investors. Under policy guidance, the dividend payout ratio of A-share listed companies has increased from about 30% to around 40%. If this trend continues, it will significantly enhance the market’s long-term investability and attract further foreign capital inflows.

The second type includes assets representing advanced productivity. Fields such as new consumption, innovative pharmaceuticals, and technology AI, which embody future directions, are worth watching. The industrial revolution amplifies human physical strength, while AI amplifies human intelligence, indicating potential breakthroughs in these areas.

(Source: Shanghai Securities Journal)