Goldman Sachs is bullish on Chinese assets again, giving AH shares an "outperform" rating
Goldman Sachs has given a "Outperform" rating to AH shares in its latest report, believing that A shares are more influenced by policy stimulus. It forecasts a potential increase of 12% and 15% for the MSCI China Index and the CSI 300 Index, respectively, over the next 12 months. Goldman Sachs is optimistic about the consumer sector, suggesting that small-cap stocks may perform better, especially the STAR Market 50 and the ChiNext Index. The price-to-earnings ratio of Hong Kong stocks is lower than that of U.S. stocks, attracting mainland investors, but the short-term outlook for A shares is more favorable
According to the latest report from Goldman Sachs, it has given AH shares an "outperform" rating, considering that the atmosphere in the A-share market is more favorable due to policy stimulus, and strategically, it is viewed more positively than H shares. Liu Jinjing, Chief Equity Strategist at Goldman Sachs China, pointed out that overseas investors are currently concerned about the risk of a recession in the U.S., coupled with years of heavy holdings in U.S. stocks, creating a demand for risk diversification. Attracted by the valuation of Chinese stocks and anticipating significant economic stimulus policies from the mainland, there is a shift towards reinvesting funds in China.
Goldman Sachs expects a 12% upside for the MSCI China Index and a 15% upside for the CSI 300 Index over the next 12 months.
Goldman Sachs noted that as global funds further increase their allocation in the Chinese market, H shares may continue to be favored, but A shares will also receive support due to the active participation of domestic retail investors. The firm is optimistic about the performance of the consumer sector, believing that further improvements in consumption and real estate will drive market growth. Goldman Sachs also pointed out that small-cap stocks may perform better, especially indices like the Sci-Tech Innovation 50, ChiNext Index, and CSI 1000.
Regarding Hong Kong stocks, Goldman Sachs believes that the current price-to-earnings ratio of Hong Kong stocks is about 10 times, which is significantly lower than that of U.S. stocks, providing some attractiveness. Hong Kong has large technology companies that are lacking in the mainland, attracting mainland investors to invest southward, which supports Hong Kong stocks. However, it is necessary to consider the impact of economic policies on the stock market; A shares will benefit more, while H shares are more influenced by external factors. Additionally, the underperformance of A shares compared to H shares since the beginning of the year is another reason Goldman Sachs is optimistic about the short-term trend of A shares