China: Onshore outperformance reshapes AI exposure – HSBC

💡 DMK Insight

Emerging market equities are showing surprising strength in 2026, but here’s the kicker: Chinese onshore and offshore markets are diverging significantly. This divergence could signal underlying tensions or opportunities. Traders should pay close attention to how these markets react to global economic indicators, especially as we move through Q1. If the onshore market continues to outperform, it might attract more institutional investment, while the offshore market could face headwinds. This situation could lead to volatility in related assets, particularly in sectors heavily tied to Chinese economic performance, like commodities and tech. Keep an eye on key levels in both markets. If the onshore index breaks above recent highs, it could trigger a wave of bullish sentiment, while a drop in the offshore market might prompt profit-taking or risk-off behavior among investors. Watch for any economic data releases that could impact these trends, especially around trade relations and monetary policy shifts.