Goldman Sachs anticipates further surges in Chinese stocks following the stimulus package by the People’s Bank of China (PBOC) announced this week, leading to a potential influx of international investors. Technical strategist Scott Rubner highlighted a surge in interest from investors experiencing “FOMO” (fear of missing out) on the Chinese stock market rally.
On Friday, the Shanghai Composite Index surged for the fourth consecutive day, marking its most significant rise since July 2020 when a comparable stimulus package was introduced by the Chinese government to support the economy during the COVID-19 crisis, while Hong Kong’s Hang Seng also saw significant gains, indicating its best weekly climb since 1998.
Rubner observed that international investors have been cautious in joining China’s stock market rally, leading to a challenging situation for foreign fund managers who had taken positions against Chinese equities.
Meanwhile, the recent uptrend could prompt a shift in investor sentiment, as Rubner pointed out a substantial increase in net buying of Chinese stocks, indicating growing confidence in the sustainability of the rally.
The upcoming 75th anniversary of the founding of the People’s Republic of China on October 1 may also serve as an additional catalyst to further propel the current stock market rally, which has already gained momentum following the Chinese Communist Party’s commitment to achieving its 5% growth target during a recent Politburo meeting on Thursday.
Barclays analysts highlighted that China’s stimulus initiatives have the potential to contribute an entire percentage point to the country’s GDP over a span of two years and considered the measures as signals of China’s genuine commitment to addressing its underlying structural challenges.
