Founder Securities Chief Economist Yan Xiang: China's Capital Market Reforms Continue to Deliver Results

BEIJING, Nov. 4, 2026 /PRNewswire/ -- Recent volatility in China's A-share market has not changed its favorable long-term outlook, according to Yan Xiang, chief economist at Founder Securities. He points to the continuing effects of capital market reforms and five factors supporting the increasing appeal of Chinese equities within investment portfolios.

A Growing Technology Presence

Capital market reforms have helped attract more technology companies to the A-share market. The STAR Market, ChiNext, and Beijing Stock Exchange now play a larger role in supporting companies developing core technologies, together accounting for nearly 80% of new listings since 2024. Technology's share of total market capitalization continues to climb; the TMT (technology, media and telecommunications) sector now represents more than one-quarter of total A-share market cap, well above the combined weight of banks, non-bank financials, and real estate. The electronics sector has surpassed banking to become the largest sector by market capitalization. As Chinese companies develop alternatives to imported technologies and strengthen their own capabilities, the A-share market is likely to become increasingly tech-focused.

Recovering Corporate Earnings

As of October 31, 2026, the vast majority of Shanghai- and Shenzhen-listed companies had reported results for the first three quarters, with 73% posting profits. For the first three quarters of 2026, combined revenue reached RMB 56.6 trillion and net profit reached RMB 5.1 trillion, up 5.8% and 8.5% year on year, respectively, with both the absolute totals and growth rates at their highest since 2022. Over the same period, net profit of STAR Market companies surged 474.6%, while ChiNext companies posted net profit growth of 22.7%. Listed companies in fields such as artificial intelligence, robotics and innovative pharmaceuticals recorded rapid earnings growth. Looking ahead, as nominal GDP growth continues to recover, Yan expects listed companies' earnings to continue rising.

Attractive Equity Valuations

Valuations across major broad-market A-share indices have returned to reasonable levels, both in absolute terms and relative to their historical ranges, with some falling to historical lows. As of October 30, the CSI 300 index traded at a price-to-book ratio of 1.3x, in the 19th percentile of its range since 2010; the Wind All-A index stood at a price-to-book ratio of 1.6x, in the 24th percentile of its range over the same period. Growth-sector valuations, after the earlier selloff, have fallen to historical lows. Overall, following the recent correction, A-share valuations are now reasonable or even low, providing support for the market.

Stronger Shareholder Returns

Dividends and buybacks are important ways for companies to return capital to shareholders and demonstrate sound corporate governance. Alongside reforms to capital market investment and financing, listed companies have become more profitable and more willing to pay dividends in recent years. A number of industry leaders are also implementing or planning substantial share buybacks. China Securities Regulatory Commission (CSRC) chairman Wu Qing said at the Annual Conference of Financial Street Forum 2026 that listed companies had paid dividends and repurchased shares totaling RMB 2.1 trillion so far this year—2.7 times the funds raised through IPOs and refinancing over the same period. Higher returns to investors will help strengthen market stability.

Further Capital Market Reform

At the Annual Conference of Financial Street Forum 2026, CSRC chairman Wu Qing outlined four priorities for better balancing the capital market's investment and financing roles: safeguarding market stability; making capital markets more inclusive; promoting a well-regulated, well-functioning market; and gradually expanding access for international participants. Yan expects these reforms to make Chinese equities more attractive to investors, strengthen market confidence, and improve the mix of capital flowing into the market, supporting its long-term outlook.

SOURCE FOUNDER SECURITIES CO., LTD.