Chinese stocks may be under pressure in near term, but 24% potential returns expected in next 12 months – Goldman Sachs
Chinese stocks may be under pressure in near term, but 24% potential returns expected in next 12 months – Goldman Sachs

Chinese stocks may be under pressure in near term, but 24% potential returns expected in next 12 months – Goldman Sachs

 

>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<

 

 

Geopolitical tensions and intensifying uncertainties will typically exert negative impact on the performance of equity markets and judging from past experiences, the Chinese stock markets tend to be under pressure and remain enervated for a certain period of time, following any geopolitical surprises/events across the Taiwan Strait, Goldman Sachs said in a note on Thursday.

The US House Speaker Nancy Pelosi recently visited Taiwan during her Asia tour, while the Liberation Army of China is set to conduct military drills and missile tests from Thursday in several areas encircling the island of Taiwan, according to the official Xinhua News Agency.

The intensifying tensions across the Taiwan Straits have prompted investors to make comparison between investment in China and Russia, but the bank noted that while geopolitical events are also impossible to predict, the size of China’s economy and financial market and its connection with other regions are significantly higher than that of Russia.

From a risk-management standpoint, investors may turn relatively cautious towards the Chinese equity market in near-term in light of recent incident, however, China’s tactical investment case is still supported by a trio of macro tailwinds — sequential economic growth recovery in 3Q, well-contained inflation, and easing policy in a regional/ global context, the bank said.

As a result, Goldman Sachs recommended investors to continue accumulating Chinese equities and forecast 24% potential returns over the coming 12 months.