AMP Ltd (ASX: AMP) shares have staged a remarkable recovery, nearly doubling from their lows a few months ago. But after a 2.5% dip to $2.28 at the start of the trading week, can the rally keep going?
AMP shares are still up 61% over six months and 28% over 12 months. Several brokers see further upside, with China's rapidly expanding pension market emerging as an unexpected catalyst.
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Why is the financial stock rallying?
AMP's China partnerships are becoming increasingly difficult for investors to ignore. The company own a 20% stake in China Life Pension Co. (CLPC) and 15% of China Life AMP Asset Management Co. (CLAMP).
In the first half of FY26, earnings from these partnerships jumped 107% to $56 million, helped by CLPC growing its assets under management to RMB2.6 trillion.
The China story comes on top of improving performance across AMP's core Australian businesses.
AMP reported an 8.2% year-on-year increase in assets under management to $167.6 billion in its latest half-year results, driven by momentum in its wealth and retirement businesses. Platforms net cash flows jumped 33% to $3.1 billion, helped by new adviser activations and stronger flows from existing advisers.
Even more importantly, Superannuation & Investments delivered its first positive half-year net cash flow since 2017, recording $76 million compared with a $75 million outflow a year earlier. Underlying net profit after tax also jumped 33% to $174 million.
AMP announced another $150 million on-market share buyback, adding further support for the investment case of AMP shares.
Could China drive the next leg higher?
The broker community appears increasingly optimistic. TradingView data shows nine of 10 brokers have a hold, buy or strong buy rating on AMP shares. The average price target is $2.44, implying around 7.4% upside.
Jefferies recently raised its 12-month price target by 23% to $2.55.
But UBS sees an even more interesting opportunity in China. The broker believes CLPC could become a major driver of future AMP share price gains, pointing to expectations that China's pension system could grow by 100% to 200% by 2030.
UBS said in a recent note that AMP has grown CLPC at 23% annually over the past decade, while operating leverage has helped profits grow at an even faster 35% annual rate.
On the back of that growth potential, UBS lifted its AMP share price target from $2.19 to $2.55.
After a stunning recovery, AMP shares aren't the obvious turnaround story they once were. But if the China opportunity continues delivering alongside improving Australian operations, the rally may not be finished yet.
