Strategists from Goldman Sachs are maintaining their stance on Chinese stocks regardless of the economic slowdown, with predictions of the benchmarks rising around 20% by year-end.
Kinger Lau, the leader of the strategists, affirms that Chinese stocks’ both onshore and offshore risk-reward ratios are still favorable. According to a note from Sunday, the sentiment and liquidity backdrop could improve in late 1Q25 from increased clarity in tariff and policy.
Broker’s optimistic outlook on Chinese stocks in November came against a recent movement in the market. The MSCI China Index plunged into a bear market a week ago and the CSI 300 gauge slipped 5% in the first seven trading sessions of the new year, the worst performance since 2016.
Goldman suggests buying government consumption proxies, emerging exporters that will benefit from a more sluggish yuan, as well as a number of tech and infrastructure companies. While shareholders should see a strong return from a series of government stimulus and falling domestic interest rates.
Additionally, the strategists also maintain an overweight stance on online retail, media, and healthcare shares while also bringing consumer services stocks up to overweight as well.
In November, Goldman predicted that Chinese stocks could rise around 20% over the next 12 months as Beijing rolled out measures to revitalize its frail economy. Despite that, China’s MSCI Index has slumped 10% as growth tumbled, producer prices collapsed, and future U.S. tariffs shook investors’ confidence.
