Investor confidence in China’s A-share market weakened in the third quarter of 2026 even as listed-company earnings began to recover, according to the latest CKGSB Investor Sentiment Survey. The survey shows lower expectations for stock-market gains, weaker appetite for direct equities and equity funds, and rising trading activity—an unusual combination that CKGSB researchers characterize as a market marked by divergent investor views rather than broad-based optimism.

China’s A-share market is entering the latter part of 2026 with a disconnect between improving corporate profitability and more cautious investor expectations.

The latest CKGSB Investor Sentiment Survey, conducted from May through September 2026, found that 58.6% of respondents expected A-share prices to rise. That was 5.2 percentage points lower than in the April survey. Expected investment returns also declined by 1.8 percentage points to negative 0.7%, while investors reported less willingness to increase their exposure to equities.

The retreat was particularly visible in direct stock investment. The net proportion of respondents intending to increase stock holdings dropped 7.3 percentage points to 10.7%. For equity funds, the corresponding measure fell 1.2 percentage points to 13.4%.

The numbers suggest that higher market activity has not translated into a similarly broad improvement in investor conviction.

Trading turnover has continued to increase. Between December 2024 and August 2026, turnover ratios for the Shanghai Composite Index increased from 2.39 to 4.2, while the Shenzhen Composite Index rose from 5.84 to 8.5. At the same time, price-to-book ratios increased more modestly, from 1.13 to 1.25 in Shanghai and from 1.93 to 2.4 in Shenzhen.

CKGSB Professor of Accounting and Finance Liu Jing, who leads the survey, interprets that combination as evidence of substantial differences in investor views. Some investors see current valuations as an opportunity, while others regard the same prices as a source of risk.

That divergence comes as corporate earnings show signs of improvement.

According to CKGSB’s survey, trailing 12-month net profit growth for A-share listed companies reached 5.9% year over year in June 2026, following a period of negative growth extending from June 2022 through March 2026. Private enterprises recorded 36.7% net profit growth in the second quarter, while strategic emerging industries posted 36% growth.

Broader official data also point to stronger industrial profitability. China’s National Bureau of Statistics reported that industrial enterprises above designated size increased total profits by 17.6% year over year during the first seven months of 2026. Private industrial enterprises recorded 10.9% profit growth over the same period.

The improvement is not uniform across the economy, however. China’s second-quarter GDP expanded 4.3% year over year, while first-half growth stood at 4.7%, according to the National Bureau of Statistics.

Recent economic data also illustrate the uneven nature of the recovery. Reuters reported that China’s industrial output rose 5.2% year over year in August, supported in part by technology and advanced manufacturing, while retail sales increased only 0.4%. Property investment fell 19.9% year over year, reinforcing concerns about weak domestic demand and the continuing property adjustment.

That distinction between industrial activity and household demand is important for interpreting investor sentiment. An economy can produce stronger earnings in selected sectors without generating an equally broad improvement in consumer confidence or investment expectations.

Technology and strategic emerging industries are among the areas showing stronger momentum. The Shanghai Stock Exchange reported that listed semiconductor companies on its Science and Technology Innovation Board recorded combined first-half net profit growth of 660.3%, although that figure reflects the specific composition and low comparison base of the sector.

The result is a Chinese equity market increasingly characterized by sectoral differentiation. Technology, semiconductors and advanced manufacturing have benefited from investment and demand linked to areas such as artificial intelligence, while property and some consumer-facing segments remain under pressure.

For global investors tracking China financial markets, the CKGSB findings therefore add a sentiment dimension to the earnings data. Rising turnover can indicate greater market participation, but it does not by itself establish that investors share the same expectations about valuations or future returns.

The survey also highlights a broader question surrounding China’s capital allocation. CKGSB argues that financial resources continue to flow disproportionately toward government entities and state-owned enterprises, while private companies and households remain important sources of demand. The school links this imbalance to China’s continuing consumption challenge. That is CKGSB’s interpretation of the economic structure, rather than an independently established causal conclusion.

The latest data arrive as policymakers continue to balance investment-led growth with efforts to strengthen domestic consumption. Recent reporting has highlighted the tension between strong manufacturing and technology activity and weaker household spending and property investment.

For the A-share market, the immediate picture is therefore mixed: corporate profitability has improved, trading activity has risen, but investor expectations have become more restrained. The CKGSB survey does not point to a single market narrative. Instead, it captures a market in which investors appear increasingly divided over how to interpret improving earnings alongside persistent macroeconomic pressures.

Market Landscape

China’s equity market in 2026 is being shaped by several competing forces: recovering corporate earnings, strong investment in technology and advanced manufacturing, subdued household demand and continued property-sector weakness.

Official data show industrial profits rising strongly in the first seven months of the year, while GDP growth has remained positive. At the same time, recent August data showed a sharp gap between industrial production and retail consumption.

The result is a market environment where aggregate economic indicators can obscure significant differences between sectors, ownership structures and investor groups. The CKGSB survey’s falling expectations for equities, despite higher turnover, provide another measure of that divergence.

Top Insights

• Investor expectations weakened: 58.6% of CKGSB respondents expected A-share prices to rise, 5.2 percentage points below the previous survey.
• Trading and conviction diverged: Shanghai and Shenzhen turnover increased substantially, while investors simultaneously reduced their stated willingness to add equities.
• Corporate profits recovered: A-share trailing 12-month net profit growth reached 5.9% in June after an extended period of negative growth.
• Technology remains differentiated: Semiconductor and strategic emerging industries are recording stronger earnings and investment momentum than several traditional sectors.
• Domestic demand remains a constraint: Recent data show stronger industrial activity alongside weak retail growth and continuing property-sector pressure.

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