Despite market downturns, Chinese stocks remain the top choice for Goldman Sachs strategists, who anticipate that key indices could see a 20% increase by the year’s end.
A recent report from Bloomberg indicated that Kinger Lau and his team at Goldman Sachs maintain a positive outlook on both mainland and offshore Chinese stocks, highlighting a favorable risk-reward scenario.
In a note released on Sunday, the strategists noted, “The sentiment and liquidity backdrop may begin to improve in late 1Q 25 on better tariff and policy clarity.”
However, this optimism exists alongside their earlier bullish forecast from November, which now seems misaligned with current market realities.
Goldman Sachs advocates for stocks related to government expenditure, exports, and technology. Goldman Sachs recommends purchasing stocks connected to government spending, exporters who stand to benefit from a depreciating yuan, as well as select technology and infrastructure companies. They believe that shareholder returns “should continue to prevail on record-breaking cash distribution and declining domestic rates.”
The strategists also favor online retail, media, and healthcare stocks, having upgraded consumer services shares to an overweight rating.
HSBC has stated that Chinese stocks listed on the Hong Kong exchange present an appealing growth narrative, bolstered by policies supporting mainland China and expectations of increased growth prospects.
In November, Goldman projected a 20% gain for Chinese stocks within a year as officials sought to address economic slowdowns. Since then, however, the MSCI China Index has seen a decline of approximately 10%, amid rising concerns over growth, falling producer prices, and new tariffs from the U.S.
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