Goldman Sachs Group Inc. strategists have reaffirmed their bullish outlook for Chinese stocks, despite recent setbacks in the market. The firm, led by Kinger Lau, predicts that key stock indices will surge by 20% by the end of 2025. According to a note released, Goldman remains overweight on both onshore and offshore Chinese shares, citing an attractive risk-reward ratio.
“We believe that sentiment and liquidity conditions could improve by the end of the first quarter of 2025, bolstered by clearer tariff and policy guidance,” the strategists wrote.
This stance persists even as a similarly optimistic forecast made in November appears increasingly disconnected from the market’s current trends.
Despite these losses, Goldman Sachs recommends that investors focus on government consumption proxies, emerging-market exporters set to benefit from a weaker yuan, and select tech and infrastructure companies. The strategists also noted that shareholder returns are likely to remain strong, driven by record-breaking cash distributions and declining domestic interest rates.
Goldman continues to favor online retail, media, and healthcare stocks, and has upgraded its outlook on consumer services stocks to overweight.
Similarly, HSBC Holdings Plc expressed optimism last week, highlighting the “favorable policy rhetoric” from mainland China and a more promising economic growth outlook for Chinese stocks listed in Hong Kong.
In a forecast made last November, Goldman had predicted a 20% gain in Chinese shares over the following year, as Chinese authorities intensified measures to support the ailing economy. However, since then, the MSCI China Index has fallen by about 10%, driven by concerns over economic growth, declining producer prices, and the looming threat of further US tariffs.
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