What will happen to the A-share market in 2026? Here's Li Daxiao's view

Editor’s Note

Bidding farewell to the Year of the Snake and welcoming the Year of the Horse. During the 2026 Spring Festival, Futures Daily invites leading institutional research experts and related specialists to review the current macro asset market trends and identify core allocation opportunities and high-quality investment tracks for the new year.

Since 2024, the A-share market has experienced a “slow bull” trend. Currently, attention to the A-share market and stock index futures remains high. In the face of this “slow bull” market, how should ordinary investors allocate their assets? With this question in mind, Futures Daily reporter conducted an exclusive interview with Li Daxiao, a former chief economist at a securities firm with many years of experience in the capital markets.

Li Daxiao told reporters that compared to 2025, the tone of the A-share market in 2026 has fundamentally changed, mainly reflected in “high-level oscillations at the start of the year intertwined with multiple uncertainties.”

“In January 2026, the Shanghai Composite Index reached a high of 4190 points, accompanied by a historic single-day trading volume of 39.9 trillion yuan. The turnover rate that month was 48%, hitting a record high. Additionally, since the beginning of 2026, the market has seen outflows of 700 billion yuan from ETFs. Coupled with major external variables such as extreme fluctuations in precious metals, the collapse of overseas virtual currencies, and a sharp decline in US high-tech stocks, many uncertainties have emerged. Based on this, the A-share market in 2026 will shift from a purely offensive stance in 2025 to ‘more defensive than offensive.’ Increasing defensive positions will be a more reasonable choice, while long-term funds such as insurance and pension funds entering the market remain important support for the future of the A-share market,” he said.

Regarding how to respond to the 2026 A-share market, Li Daxiao offered three suggestions: First, resolutely avoid chasing high prices, which is the primary principle for risk avoidance in a high-level market; second, adhere to the pyramid-building principle for position-taking, avoiding unreasonable “heavy top and light bottom” layouts, ensuring “big feet and small head” to reduce holding risks; third, stick to value investing, prioritizing increasing holdings in listed companies with solid fundamentals and genuine investment value, avoiding overhyped stocks with high valuations based on concepts, and rejecting “hype” while focusing on “practical” targets.

On investment themes, Li Daxiao emphasized that “high technology and high dividends are the main battleground,” clearly stating that blue-chip stocks with high dividends will be one of the core investment themes for the 2026 A-share market.

“When the A-share market is near 4000 points, the investment value of high-dividend blue-chip stocks still exists. Their dividend yields are significantly attractive compared to traditional investment products like government bonds and bank deposits, and they have stronger resilience in volatile markets,” Li Daxiao said.

However, he warned investors to remain vigilant against high-dividend traps. Some stocks may appear to offer generous dividends but actually carry the risk of value destruction. Such “value traps” should be strictly avoided.

Li Daxiao believes that, from a sector perspective, high-dividend stocks in finance, dividends, and leading state-owned enterprises have greater long-term allocation value.

Additionally, the consumer sector is expected to become another major investment theme in 2026. Li Daxiao believes that benefiting from policies aimed at expanding domestic demand and promoting consumption, the consumer sector has certain growth potential. However, compared to undervalued blue-chip stocks, the valuation levels of consumer stocks are not advantageous, and historically, their valuations have not been among the market’s top. Therefore, investing in consumer stocks requires a focus on quality, emphasizing “selecting the best among the good” and focusing on certainty opportunities.

It is also worth noting that global market volatility will intensify in 2026, which will be an important external factor affecting the A-share market.

Li Daxiao stated that the sharp decline in US tech stocks, halving of Bitcoin prices, and extreme fluctuations in precious metals collectively bring uncertainty to the global financial markets. This may lead to a reallocation of global funds, shifting from concentrated US stock positions to more diversified allocations. As a result, some capital may flow into the A-share and Hong Kong markets. However, the specific impact depends on the level of external market volatility. If external markets remain relatively stable, the A-share market may attract more funds; if volatility is excessive, the A-share market could also be affected.

Nevertheless, he pointed out that the A-share market has relatively stable supporting factors, such as the presence of stabilization funds, ongoing long-term capital inflows, and the market regulation potential from the 700 billion yuan ETF reductions, all of which could help maintain relative stability and even enable the market to break out independently.

Li Daxiao believes that a single-day trading volume of 4 trillion yuan may become a mid- to long-term volume peak, and 4190 points could be a mid-term top. However, the probability of it becoming the ultimate peak is low, mainly because the core blue-chip assets in the current A-share market are not excessively overvalued.

Regarding asset allocation, Li Daxiao recommends that investment in bonds in 2026 should not be overly aggressive, and a neutral and cautious stance is advisable. He is optimistic about investment opportunities in the insurance sector, while the non-ferrous metals sector will fluctuate with precious metals, requiring careful timing. For investors seeking stable returns, balancing assets among bonds, insurance, and stocks is recommended. Borrowing from Buffett’s investment philosophy, maintaining a certain proportion of cash assets in high-level markets can achieve a balanced “attack and defense” allocation.

He also warned that in 2026, special attention should be paid to the risks of newly listed stocks and high-valuation stocks. Investors who accumulated positions at low levels in previous years should avoid losing high-quality holdings amid market fluctuations.

Looking ahead to the second half of 2026, Li Daxiao believes that the risk of a peak in US tech stocks will be the biggest external variable for the A-share market. If the US market experiences an unexpected correction, investors should shift from an offensive to a defensive strategy or prioritize “more defense than offense,” diversifying US-related positions and increasing allocations to high-dividend, state-owned, and central enterprise stocks. If opportunities similar to the low point on April 7, 2025, arise, moderate positioning can be considered to correct previous imbalances. If the market surges beyond expectations, investors should control impulses and avoid chasing highs.

Finally, Li Daxiao emphasized that in 2026, investors should continue to adhere to deleveraging, focus on remaining cash, invest rationally, and pursue value investing. Only by “being good people and buying good stocks” can they achieve long-term, stable returns.

“In summary, the three keywords for 2026 investment strategy are ‘steady defense, optimal allocation, and avoiding chasing highs.’ By seizing opportunities amid challenges and sticking to value in volatility, investors can navigate market cycles, preserve assets, and achieve growth,” he concluded.

(Source: Futures Daily)