Hong Kong, China stocks to outpace US equities all year: analysts

Hong Kong and mainland Chinese stocks outpaced their US peers for the first two weeks of 2026 and should continue to do so for the rest of the year on the back of relatively cheaper valuations, a firmer yuan and policy tailwinds, as geopolitics drives more global investors to look to China as a hedge against rising risks in US assets, according to analysts.

The CSI 300 Index has gained 2.4 per cent so far this year, while the Hang Seng Index has climbed 5.3 per cent, both outpacing a 1.7 per cent gain in the S&P 500. The mainland Chinese and Hong Kong benchmarks jumped 18 per cent and 28 per cent, respectively, in 2025, while the US gauge rose 16 per cent.

Strategists said the re-rating of Chinese stocks was still under way, as their relatively cheaper valuations versus US equities had become increasingly difficult for global investors to ignore.

While major US benchmarks continued to hover near record levels despite years of gains, underlying economic data pointed to a slowdown, according to Tiger Brokers, an online broker backed by shareholders including Xiaomi. This raised the risk that future returns could be capped even if corporate earnings remained resilient, it said.

“The US market is not necessarily at a peak, but it is at a very high position in the cycle,” said Xu Yang, global partner of Tiger Brokers, who added that markets priced at such levels become more sensitive to negative macro surprises.

By contrast, the valuation multiples in Chinese markets had climbed back towards historical medians, which left Chinese stocks “not cheap, but not expensive”, according to Tiger, with room for further gains if corporate earnings began to recover in line with expectations.

The brokerage estimated that over the next five to seven years, average annualised returns for US equities would fall to around 3 to 5 per cent, reflecting stretched valuations, persistent inflation risks and uncertainty over the pace of Federal Reserve rate cuts.