2026-01-08 02:37:00
Summary:
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Barclays urges selectivity in Chinese tech for 2026
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Broad stimulus-driven gains seen in 2025 unlikely to repeat
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EV sector faces rising headwinds as tax incentives fade
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Preference for resilient revenue and AI-linked names
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Tencent, Trip.com and Alibaba cited as selective plays
Barclays is urging investors to adopt a more selective approach to Chinese technology stocks in 2026, warning that the broad-based rally seen last year is unlikely to be repeated as policy tailwinds fade and sector-level headwinds emerge.
In a recent note, Barclays analysts argued that the government stimulus impulse that supported widespread gains in 2025 has largely run its course, reducing the likelihood of another year of uniform outperformance across China’s tech complex. Instead, the bank expects greater dispersion in returns, with stock selection becoming increasingly important.
The analysts highlighted particular challenges for China’s electric-vehicle sector, where profit margins are already under pressure from intense competition. Beijing’s move to scale back sales tax incentives for EV purchases is expected to weigh further on demand growth, making it harder for manufacturers to sustain earnings momentum. As a result, Barclays cautioned against assuming that past sector-wide gains can continue uninterrupted.
Against this backdrop, Barclays prefers companies with defensive or resilient revenue models, as well as those with a clear and credible artificial intelligence strategy. Firms with diversified income streams, strong platforms and pricing power are seen as better positioned to navigate a slower-growth, less stimulus-driven environment.
Among its preferred names, Barclays highlighted Tencent and Trip.com, citing their relatively stable cash flows and exposure to structural growth trends rather than policy-dependent demand. Tencent’s broad ecosystem and recurring revenues are viewed as offering resilience, while Trip.com is seen benefiting from ongoing recovery in travel and services consumption.
The bank also pointed to Alibaba as a selective opportunity, not on macro stimulus grounds, but due to its positioning in cloud computing and artificial intelligence, where monetisation potential could drive differentiated earnings growth.
Overall, Barclays’ message contrasts with more optimistic calls on China equities (Goldman Sachs sees further China equities upside on AI and earnings growth: “Prominent 10”). While acknowledging selective upside, the bank argues that 2026 is shaping up as a stock-picker’s market, where earnings durability and business quality matter more than broad policy support.
