UBS Adds Kuaishou and Meituan to China Focus List, Boosts Alibaba Stake

UBS has added Kuaishou Technology and Meituan to its China Global Equity Focus List while increasing its allocation to Alibaba Group and Ping An Insurance. The moves reflect the bank's constructive outlook on Chinese equities, driven by accelerating AI adoption and supportive government policies.

Key Portfolio Changes

In a research note, UBS outlined several adjustments to its model portfolio. The bank initiated new positions in two major technology firms:

• Kuaishou Technology (1024.HK): Added with a 3% portfolio weighting. UBS cited the company's advancements in artificial intelligence, highlighting its Kling AI model as a global leader in text-to-video generation with user engagement comparable to OpenAI's Sora.
• Meituan (3690.HK): Added with a 2% weighting. The bank argued that the most intense phase of competition in China's food-delivery market has passed, positioning the stock for a tactical rebound and steadier earnings recovery from the second quarter.

Alongside these additions, UBS removed China Merchants Bank, China Mobile, and Jiangsu Hengrui Pharmaceuticals from the focus list.

Increased Conviction in Tech and Insurance

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UBS also increased its holdings in several existing positions, signaling higher conviction in their growth prospects. The bank raised the weighting of Ping An Insurance by 2 percentage points and Alibaba Group by 1 percentage point.

Smaller increases of 0.5 percentage points each were made to WuXi AppTec and Xiaomi. To fund these changes, the bank trimmed its exposure to China Construction Bank, Midea Group, Yum China, China Pacific Insurance, and PICC Property & Casualty.

Outlook on Chinese Equities

UBS reiterated its "attractive" view on the Chinese market, stating it continues to favor technology stocks due to robust AI-driven growth and ongoing chip localization efforts. The bank believes leading semiconductor, AI supply-chain, and internet platform companies are well-positioned to benefit from rising AI monetization.

Looking ahead, UBS said it expects mid-teens returns for Chinese equities through June 2027. This forecast is supported by improving corporate fundamentals, continued policy support, and the long-term growth potential of artificial intelligence.