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

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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

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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