China Local Markets 2026 Mid-Year Outlook: Safer harbor, calmer waters

Research evidence excerpt

China Local Markets 2026 Mid-Year Outlook: Safer harbor, calmer waters

J P M O R G A N Global Markets Strategy

26 June 2026

This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the

territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan.

China Local Markets 2026 Mid-

Year Outlook

Safer harbor, calmer waters

• CNY FX and rates emerged as relative safe havens amid elevated global Emerging Markets Strategy

AC volatility in 1H26. USD/CNH declined a further 2.4% in a Tiffany Wang

smoother‑than‑expected glide, aided by a near one‑way lowering in the fix. (852) 2800-1726

This resilience, against a shifting USD backdrop, lifted the CNY TWI by 4.5% tiffany.r.wang@jpmorgan.com

and drove outperformance versus Asia and major G10 FX. Meanwhile, CNY J.P.MorganMorganBrokingSecurities(Hong (AsiaKong)Pacific)LimitedLimited/ J.P.

rates remained insulated from the global rates sell-off, with yields lower across

Arindam Sandilya

the curve. Combined with FX gains, CGBs delivered a total return of ~5% ytd (65) 6882-7759

—modest versus EM high‑yielders, but still notable for a low‑yielding market. arindam.x.sandilya@jpmorgan.com

• CNY FX: Staying constructive; expecting further CNY strength in 2H26. JPMorgan Chase Bank, N.A., Singapore Branch

Despite soft domestic conditions, resilient exports and a pickup in foreign

inflows continue to underpin a strong flow backdrop for CNY FX. While wide

US–China rate differentials remain a structural headwind, upcoming

presidential engagements should encourage a supportive PBoC stance.

Although the CNY TWI is above recent year trends, it remains well below prior