Current location:opinions >>
Goldman Sachs upbeat on A shares
opinions9People have gathered around
IntroductionGoldman Sachs, a global investment banking, securities and investment management firm, sees double-d ...
Goldman Sachs, a global investment banking, securities and investment management firm, sees double-digit growth potential in valuations of China's A shares, given the country's recently released nine measures to promote the high-quality development of the capital market.
Without indicating any timeframe, Goldman Sachs analysts on Tuesday projected certain upbeat scenarios for the A-share market. Citing the policy-driven upside potential as well as other positives like stabilizing economic growth and attractive current valuations, the investment bank said it remains overweight on A shares.
Kinger Lau, chief China equity strategist at Goldman Sachs, said, "We sense that international investor sentiment, risk appetite and interest are improving regarding Chinese equity markets."
This trend is partly attributable to China's better-than-expected economic performance in the first quarter, Lau said, which has led Goldman Sachs to raise its 2024 full-year growth forecast for China from 4.7 percent to 5 percent.
Goldman Sachs' overweight view on the A-share market is related to the "National Team "buying Chinese equities, solid fourth-quarter earnings results, a valuation level remaining close to cycle troughs and light positioning from investors globally, Lau said.
The guideline released by the State Council, China's Cabinet, on April 12 outlined nine new measures to boost the high-quality development of the capital market, and has added another layer of hope, he said.
The guideline was the third such document issued by the State Council on the country's capital market in the past two decades, demanding strengthened oversight over listed companies, including on cash dividends, strict regulation of entry into the capital market and intensified delisting regulations.
At a State Council study session on Monday that focused on further reforms of the capital market for its steady and healthy development, Premier Li Qiang stressed that it is necessary to take the implementation of the guideline as an opportunity to boost the reform and development of the capital market.
A Goldman Sachs report released on Tuesday shows that A shares could rise 19 percent if they could narrow the gaps with international averages along the dimensions of corporate governance standards, long-term investor ownership and shareholder returns, including dividends and buybacks.
In a more aggressive scenario where the Chinese equity market can match global leaders on those dimensions, there is as much as nearly 40 percent valuation upside potential for A shares, which the report referred to as a "blue-sky "scenario.
"What we're trying to say here is that even without the fundamental macro growth situation getting a lot better, but by just doing the right policy, there's still a lot of value to be unlocked from the stock market," Lau said.
With the nine measures to be gradually implemented, the investment theme of shareholder returns — which refers to investing in A-share companies with strong dividend payouts and share buybacks — would particularly present investment opportunities, Lau said.
Another leading global investment bank UBS has upgraded the MSCI China Index to overweight thanks to early signs of pickup in consumption.
However, Lau cautioned against the risk of potential worsening US-China trade frictions. "As we get into the (US) election events, we think there could be more noise and more policy risks from the US specifically targeting China, so that could be a key avenue for volatility for the Chinese assets."
Amid pressures on global equities due to worries about geopolitical tensions and the potential of the US Federal Reserve delaying rate cuts, China's key A-share market index hovered around 3,000 points this month, shedding 0.74 percent to close at 3021.98 points on Tuesday.
"The reality is that the political environment is one where there will be some pushback against Chinese imports," said Timothy Moe, Goldman Sachs' chief Asia-Pacific regional equity strategist and co-head of macro research in Asia.
This has made it important for China to stimulate domestic consumption to achieve stable economic growth, Moe said.
Nevertheless, it is unfair to blame the Chinese government's support as the sole reason behind the current disputes surrounding overcapacity and the world needs to understand the causes of the issue better, he added.
Tags:
Reprint:Friends are welcome to share on the Internet, but please indicate the source of the article when reprinting it.“Earthly Encounters news portal”。http://guam.ekjotinstitute.com/news-22b699343.html
Related articles
Devout Christian doctor, 68, who punched dementia
opinionsAn 'arrogant' doctor who punched a vulnerable patient for making a racist comment and spitting at hi ...
【opinions】
Read moreDemocratic donors paid more than $1M for Biden's legal bills for special counsel probe
opinionsWASHINGTON (AP) — Democratic donors covered more than $1 million in legal fees racked up by attorney ...
【opinions】
Read moreTrump’s hush money trial will test Alvin Bragg's efforts at neutrality
opinionsNEW YORK (AP) — When he was elected two years ago as Manhattan’s first Black district attorney, Alvi ...
【opinions】
Read more
Popular articles
- Pentagon vows to keep weapons moving to Ukraine as Kyiv faces a renewed assault by Russia
- Augsburg edges closer to European spot with 2
- Wrexham eyes another promotion, this time to 3rd tier of English soccer
- Oil and gas companies must pay more to drill on federal lands under new Biden administration rule
- Who is Jacob Zuma, the former South African president disqualified from next week's election?
- Trump's abortion statement angers conservatives and gives the Biden campaign a new target
Latest articles
Supreme Court rejects an appeal from a Canadian man once held at Guantanamo
Why more state abortion bans present opportunities for Democrats
Biden could miss the deadline for the November ballot in Alabama
How a Black conservative activist arranged Donald Trump's stop at an Atlanta Chick
Student fatally shot, suspect detained at Georgia's Kennesaw State University
SMU suspends football player named in high
LINKS
- German lawmakers assail far
- Jeff Bezos's glamorous fiancée Lauren Sanchez is unrecognizable in never
- French air traffic controllers cancel a strike but Paris flights are still disrupted
- Tenerife official tells Brits looking for all
- García and Carter hit back
- Naomi Watts, 55, proves she's in the best shape of her life as she flexes her eye
- Controversy over spiked antifascist speech dominates Italy's Liberation Day anniversary
- Fire burns a restaurant and hotel in eastern India, killing 6 and injuring 20
- Olivia Dunne calls for boyfriend Paul Skenes to get his Pittsburgh Pirates MLB debut
- Rolling Stones set to play New Orleans Jazz Fest 2024