Goldman sees 30% upside for Chinese stocks by 2027 on policy support, earnings growth
China’s AI advance and a rebalancing of capital flows could also serve as potential drivers of stocks despite US tensions, bank says
Chinese stocks could rise by about 30 per cent through the end of 2027, buoyed by a confluence of factors from policy tailwinds to re-acceleration of earnings growth and reallocation of global and household assets, according to Goldman Sachs.
The projected gains would be driven by a compound annual profit growth of 12 per cent and a valuation expansion between 5 and 10 per cent, analysts led by Kinger Lau and Timothy Moe at the US investment bank said in a research note on Wednesday.
Goldman’s forecast came at a time when a blistering run in Chinese stocks showed signs of faltering amid a resurgence of tensions between Beijing and Washington. The MSCI China Index has fallen almost 5 per cent from an October 2 high after the US threatened a new 100 per cent tariff on Chinese imports in response to restrictions on rare earth exports placed by Beijing. Before the pullback, the gauge had rallied 41 per cent this year on China’s breakthrough in artificial intelligence, Beijing’s determination to address deflation, and a migration of bank savings.
“Bull markets seldom go up in straight lines, and a cyclical macro slowdown in the fourth quarter and resurgent tariff risks, among others, could be taken as profit-taking excuses,” Goldman said.
