AMP Ltd shares (ASX:AMP) jumped nearly 10% to lead the ASX 200 benchmark index on the Thursday, after the wealth manager flagged materially stronger first-half profits driven by booming China partnerships and higher investment returns.
AMP shares closed up 9.83% at A$1.90, making the stock the day’s strongest performer on the ASX 200. The rally pushed AMP back into positive territory for the year, with the stock now up 3.83% year-to-date.
The close to double digit percentage gains for AMP shares marks a notable turnaround for a stock which has spent much of 2026 languishing in negative territory, as markets weighed the sustainability of the group’s earnings recovery. Today’s update appears to have shifted sentiment decisively, at least in the near term.
Upgraded Earnings Guidance
AMP issued guidance for underlying net profit after tax (NPAT) in the first half of 2026 in the range of A$170 million to A$180 million. The midpoint of A$175 million represents a jump of approximately 30-37% compared to the A$131 million reported in the prior corresponding half, marking one of the most substantial earnings upgrades the company has delivered in recent years.
The profit improvement stems from multiple sources across AMP’s business lines. China partnerships contributed approximately A$56 million to first-half earnings, representing a 24% increase over the second half of 2025. This continues a strong growth trajectory that saw China partnership earnings rise more than 50% across the full 2025 financial year, driven primarily by AMP’s stake in China Life Pension Company, which manages approximately A$515 billion in assets under management.
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Group investment income added roughly A$5 million compared to the first half of 2025, benefiting from higher interest rates and stronger equity market returns. The company’s Platforms division saw a favourable A$5 million impact from the North Guarantee, a mark-to-market valuation adjustment tied to guarantee obligations.
Carried Interest from Legacy Assets
A notable contributor to the half-year result was the recognition of approximately A$13 million in carried interest from asset sales. This income relates to a 51% stake in legacy fund assets previously held by AMP Capital’s International Infrastructure Equity business, now managed by DigitalBridge following the sale of AMP Capital’s infrastructure and real estate operations.
AMP noted that DigitalBridge elected to pay a portion of the carried interest early, ahead of any final sale of the remaining 49% interest in the underlying assets. The company flagged potential for further carried interest earnings if the remaining stake is sold, but explicitly warned that this outcome remains subject to conditions and regulatory approvals, with no guarantee of completion or quantum.
The carried interest represents high-margin profit that directly supports the upgraded earnings guidance, though markets are likely to treat it as a non-recurring item when assessing AMP’s sustainable earnings power.\n\n## Offsetting Factors
Not all valuation movements worked in AMP’s favour during the half. The company recorded a negative revaluation of approximately A$12 million in sponsor investments classified under “Other Partnerships”, reflecting mark-to-market losses on certain illiquid or levered holdings. This serves as a reminder that AMP’s earnings mix still contains a meaningful component of fair-value and valuation-sensitive items, which can swing positive or negative depending on market conditions.
Even after accounting for this drag, the net earnings uplift remains substantial, suggesting that the core franchise is improving faster than these valuation headwinds can offset.
China Partnerships as Growth Engine
The continued strength of China partnerships is emerging as a structural growth pillar for AMP. China Life Pension Company, in which AMP holds a 15.8% stake, saw assets under management grow approximately 17% during 2025 to reach around RMB 2.4 trillion. The partnership generates fee income for AMP that is largely capital-light and benefits from favourable tax treatment, with some joint venture income non-assessable for Australian tax purposes.
This earnings stream has moved from a “nice-to-have” diversification play to a core profit driver, contributing materially to group results and providing exposure to China’s rapidly expanding pension system. The 24% half-on-half growth reported today suggests that momentum is accelerating rather than plateauing, which is likely a key factor behind the market’s positive reaction.
However, this exposure also introduces regulatory, foreign exchange, and macroeconomic risks tied to China. Any tightening of rules around foreign joint ventures, capital flows, or pension reforms could pressure this earnings pillar, and investors with a negative view on China’s economic outlook may apply a valuation discount to this income stream.
Capital Management and Shareholder Returns
The improved earnings outlook provides AMP with enhanced financial flexibility to continue its shareholder-friendly capital management framework. The company has been executing a A$150 million on-market buyback and paid total dividends of 4 cents per share for the 2025 financial year, albeit at just 20% franking given the group’s tax position.
Higher earnings and the cash inflow from carried interest strengthen AMP’s ability to sustain or potentially increase capital returns, which should support the stock’s valuation multiple. However, aggressive capital returns also limit balance sheet flexibility if market or credit conditions deteriorate sharply, a consideration for more risk-averse investors.
Looking Ahead
AMP will release its full first-half 2026 results on 6 August 2026, at which time the company plans to provide more detailed commentary on its full-year 2026 outlook. Markets will scrutinise how much of the profit uplift represents sustainable run-rate earnings from China partnerships, fee income, and cost control versus transient contributions from carried interest, revaluations, and cyclical investment income.
With AMP’s share price now at a 2026 high, and up 62% in four months, momentum appears to be firmly with the bulls following those March lows.
