Jamie Spencer
Goldman Sachs Revises Chinese Stock Index Targets
Goldman Sachs Group Inc. has once again revised down its targets for major Chinese stock indexes, citing escalating US-China trade tensions. The team, led by strategist Kinger Lau, stated that the trade conflict has escalated to unprecedented levels, raising concerns about a global recession and the risks of economic decoupling between the two largest economies in areas such as capital markets, technology, and geopolitics.
Lowered MSCI China and CSI 300 Index Targets
Goldman Sachs reduced its 12-month target for the MSCI China Index to 75, down from 81, and cut its target for the CSI 300 Index to 4,300 from 4,500. The new targets suggest a potential upside of 12% and 15%, respectively, based on Friday’s closing levels. These adjustments reflect the ongoing pressure from heightened trade tensions.
Impact of Escalating US-China Trade War
Chinese stocks have taken a significant hit due to the intensifying trade war. Beijing’s decision to implement retaliatory 125% tariffs on US goods follows President Trump’s 145% tariffs on China. The ongoing uncertainty and fears of further escalations in trade relations continue to weigh heavily on investor sentiment.
Respite from US Tariff Pause
Despite the challenging environment, Chinese stocks saw some relief on Monday, with the MSCI China Index rising by 2.6% after the US announced a pause in tariffs on key Chinese goods like phones, computers, and consumer electronics. Similarly, the CSI 300 Index saw a modest 0.2% gain.
Goldman Sachs’ Stance Amid Market Volatility
Goldman Sachs has historically maintained a bullish stance on Chinese equities, often defying market sentiment during downturns. In February, Lau had raised the MSCI China target to 85, expecting further gains driven by developments like DeepSeek. However, the index has dropped more than 8% since then, as President Trump continued to threaten additional tariffs on China.
Strategic Shifts and Policy Expectations
Following the implementation of Trump’s tariffs on April 2, Goldman Sachs revised its MSCI China target to 81. The strategists now favor A-shares over H-shares tactically, and have upgraded banks and developers to an overweight position. They anticipate “decisive and forceful” policy changes from China to mitigate the impacts of the trade shock.
