Goldman Sachs expects an economic transition from “reopening to recovery” driving Chinese stocks up as much as 24% by the end of this year, while anticipating the selloff since late January to reverse as the economy’s reopening creates windfall gains for businesses.
On Monday, Goldman Sachs strategists said that the MSCI China index could increase by 24% as the country moved from the reopening that followed its harsh zero-Covid rules into a growth period.
The American investment bank predicted that the recovery of the Chinese stock market would replace the reopening as the primary theme, and that earnings growth and delivery would replace multiple expansion as the driver of prospective gains.
A bull market for Chinese stocks began around the Lunar New Year this year, with the MSCI China index reaching its peak at the end of January, up about 60% from the all-time low in October.
Expectations are growing that China’s administration will reveal more pro-growth policies during the National People’s Congress in March. Beijing defined an aggressive growth target and laid the groundwork for greater fiscal stimulus at last year’s summit, which is widely seen as a watershed event for the country’s economic policies.