Goldman Sachs expects 20% rise in Chinese stocks
Goldman Sachs projects market recovery for Chinese stocks
Goldman Sachs strategists are maintaining a positive outlook on Chinese stocks, projecting a 20% increase in major benchmarks by the end of 2025, despite the ongoing market turmoil.
In a note published Sunday, strategists led by Kinger Lau reiterated their "overweight" stance on both onshore and offshore Chinese equities, citing favourable risk-reward conditions, reports Bloomberg.
Goldman’s prediction comes at a time when Chinese markets are facing significant headwinds. The MSCI China Index recently fell into a bear market, and the CSI 300 has dropped more than 5% in the first seven sessions of 2025, marking its worst start since 2016.
Nonetheless, the firm remains optimistic, arguing that sentiment and liquidity conditions could improve in the first quarter of 2025 with better tariff and policy clarity from the government.
Strategists Recommend Targeted Investments
Despite the broader market challenges, Goldman Sachs advises investors to focus on specific sectors. The firm recommends buying stocks in government consumption proxies and emerging market exporters that stand to benefit from a weaker yuan.
Additionally, select tech and infrastructure stocks remain attractive, while shareholder returns are expected to remain strong due to record cash distributions and falling domestic interest rates.
Goldman also maintains an "overweight" position on online retail, media, and healthcare stocks and has upgraded consumer services shares to "overweight" as well. These sectors are expected to thrive despite broader market pressures.
HSBC Joins in Bullish Sentiment
Goldman’s positive outlook is echoed by HSBC Holdings, which expressed optimism about Chinese stocks listed in Hong Kong. The firm highlighted favourable policy rhetoric from mainland China and a more promising economic growth forecast.
Despite the current market downturn, both Goldman Sachs and HSBC believe that Chinese stocks remain poised for recovery, driven by government policy support and an improving economic backdrop.
Reminder, as Treasury yields surge and the dollar strengthens, Morgan Stanley strategists caution that U.S. equities may face significant challenges in the first half of 2025.
