Goldman Sachs strategists remain bullish on Chinese equities but remain the favorites even amid low market performance. The mainland and offshore Chinese stocks will be up by roughly 20% per the projected benchmarks, which are still optimistic despite the ongoing markets.
Kinger Lau led the team in bringing sentiments on the recovery as an echo, which the group considers may happen by late Q1 2025 concerning sentiments and liquidity. In a recent note, the strategists noted that improving the tariff and policy fronts could help turn around the market, while the previous bullish outlook in November has not yet come to fruition.
Sectors recommended by Goldman Sachs
Government spending remains Goldman Sachs’ preferred benchmark for stocks connected to it, as do exporters profiting from the yuan depreciation and specific IT and infrastructure companies. These sectors are well-positioned for record shareholder returns and declining domestic interest rates.
They continue to favor Internet retailing, media, and healthcare sectors, considering them good potential expanders. Moreover, the bank has also moved consumer services into the overweight position, meaning more confidence has been placed in these sectors to provide returns.
Challenges facing Chinese stocks
However, Chinese stocks have had their fair share of adversities, Even with such optimistic outlooks. Since Goldman Sachs predicted in November that China’s MSCI index would rise by 20 % within one year, the index has fallen by about 10 percent. These factors, including a slowdown in economic growth, continually declining producer prices, and new tariffs imposed by the United States, have raised concerns and greatly negatively affected investors.
Goldman Sachs still well acknowledges these pressures. However, the firm believes that policy support at the right places and changing liquidity conditions will somewhat balance out these pressures. Such an outlook remains achievable in the long term based on the understanding that Chinese stocks will remain appealing to investors.
Broader market perspective
Goldman is not alone in its optimism; for instance, HSBC also sees China A50 stocks listed in Hong Kong as a growth story. HSBC analysts say continued favorable policies and positive economic outlooks should steady investor confidence in the coming months.
However, it has failed to deliver in the recent market situation, for which Goldman Sachs continues to hold its ground on its favorable outlook on Chinese equities as conditions on the external front improve. Emphasizing the development of certain growth sectors and the right policies demonstrates their belief in China’s capacity to cope with the ongoing economic drag.