J.P. Morgan China/HK FTM 19 May 26 China Equity Strategy; China Regional Banks; China Housing: Tier-1 green shoots, durability unproven; China Economics; Hong Kong Equity Strategy

研报英文原文证据摘录

J.P. Morgan China/HK FTM 19 May 26 China Equity Strategy; China Regional Banks; China Housing: Tier-1 green shoots, durability unproven; China Economics; Hong Kong Equity Strategy

Asia Pacific Equity Research

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China/HK First to Market 19 May 2026

Top Stories

China Equity Strategy, China, Hong Kong (Erin Zhang, CFA / Tim Huang)

1Q26 Earnings Dissector: AI driving China's capex boom; autos, battery materials and lithium

leading anti-involution

The internet majors’ 1Q26 results released in the past week give us more confidence in MSCI China’s

valuation rerating, and we upgrade Consumer Discretionary to Neutral from UW, funded by downgrading

Consumer Staples to UW from Neutral on further EPS downgrades (Figure 1). We also reiterate our positive

stance on China’s AI ecosystem theme, which not only recorded strong EPS y-y (MXCN IT now +132% EPS

y-y in 1Q26), but also drove China’s capex-inventory dual upcycle in 1Q. We swap Minimax to Baidu for the

latter’s exposure to Tencent’s capex ramp-up (Figure 2). We also revisit the progress of anti-involution, and

note that autos, battery materials, and lithium are among the leaders. The auto sector exemplifies the anti-

involution initiative’s broader goal, namely moving from destructive price wars to R&D and value-oriented

competition, with exports emerging as a key structural driver (April passenger vehicle exports hit 800k units,

+85% y-y). We keep BYD-H as a JPM China top pick. The stock screen of A-share listings by free-float