Goldman Sachs said China may still be months away from reopening as elderly vaccination rates remain low with only 60.81% and case fatality rates appear high among those unvaccinated of nearly 15%. The financial firm expected reopening in China to occur in the second quarter of 2023, which was the same timeline as the firm speculated earlier. Moreover, Goldman Sachs said that China stocks may jump 20% at reopening.
The statement came on the day that the number of daily Covid cases in China rose to its highest level in over six months as widespread outbreaks have occurred while health officials have vowed to maintain China’s stringent virus regulations.
The country reported 5,436 cases on Sunday, a 27% increase from the previous day and the highest since May 2, when Shanghai was under a months-long lockdown.
Goldman Sachs wrote that when the time comes for the reopening of the world’s second largest economy, it will be good news for the stock market.
“We estimate that a full reopening could drive 20% upside for Chinese stocks based on empirical, top-down, and historical sensitivity analyses,” wrote Goldman Sachs’ economists in a separate note.