UBS: Improving fundamentals combined with valuation advantages, the Chinese stock market still has further room for growth.

UBS China stock strategy research director Wang Zonghao released the Chinese stock strategy on April 27th, believing that the improvement in fundamentals and the relatively small impact of China's exposure to energy shocks will make the Chinese market perform better than other regions in the short term. Wang Zonghao stated that valuation and capital inflows provide further upside potential for the Chinese stock market. With recent rises in the United States and some Asian markets, the MSCI China Index valuation once again appears attractive. Over the next two months, UBS expects potential upside for both A-shares and H-shares, but for different reasons. A-shares may benefit more from steady industrial profit growth, while H-shares may be catalyzed by factors such as reduced competition in food delivery prices and the launch of new AI models by DeepSeek. Despite the recent rise in global energy and commodity prices due to Middle East conflicts, there still remains a certain level of inflation challenge in global markets, but China's position may be relatively more favorable. Compared to other regions, China's strategic oil reserves are relatively ample, and the proportion of oil and gas in energy consumption and electricity production structures is relatively small, with higher penetration rates of renewable energy and electric vehicles. Therefore, the impact on Chinese companies may be relatively smaller. UBS continues to recommend that investors maintain a balanced portfolio, with industries they are most optimistic about including AI technology hardware, power equipment, and non-ferrous metals.