198 Amidst the ongoing economic rebalancing in China and a shift towards a more accommodative policy environment, Goldman Sachs has identified sectors in the mass consumer market and technology, media, and telecom (TMT) as likely winners in the coming year. The Chinese central government has signalled a supportive policy posture, incorporating monetary easing, fiscal stimulus, property market relaxation, and industry deregulation. Goldman Sachs Chief China Equity Strategist, Kinger Lau, highlighted the exercise of a “policy put” across key policy cohorts, suggesting a readiness for policy easing if economic conditions weaken. As the Chinese economy faces headwinds, the upcoming Third Plenum of the 20th Central Committee of the Chinese Communist Party is expected to provide additional policy cues. While the MSCI China and CSI 300 indexes are on track for their third-straight annual losses, Goldman Sachs anticipates a potential turnaround in 2024. The investment bank projects a 12% rise for MSCI China and a 15% increase for CSI 300, supported by an estimated earnings growth of about 10% and moderate valuation gains. Goldman Sachs strategists, led by Lau, outlined their 2024 outlook, pointing out opportunities in China’s rebalancing toward sectors like artificial intelligence and new infrastructure, aligned with national development objectives such as batteries, new energy vehicles, and renewable energy. Key changes in their outlook include upgrading the food and beverage sector to overweight, and the technology hardware sector to overweight from underweight. The strategists anticipate a reversal of the tech hardware sector’s downtrend in 2024, driven by global restocking and specific product cycles. However, they downgraded Chinese consumer services and insurance sectors from overweight to market weight, and Chinese banks from market weight to underweight due to exposure to the Chinese property crisis. The ongoing housing deleveraging process is expected to continue impacting economic growth in the coming years. Goldman Sachs remains optimistic about onshore Chinese stock markets, retaining their overweight rating for onshore markets while adjusting the H-share market to market weight from overweight. The strategic investment case for China A-shares is deemed more compelling, considering lower sensitivity to geopolitical and liquidity factors, elevated equity risk premium, and better sector alignment with policy tailwinds and China’s growth objectives. You Might Be Interested In U.S. Bank Profits Plummet 44% in Q4 Amid Large Firms Covering Failed Bank Costs Oil prices rose by 1.5% following the commitment of Saudi Arabia and Russia to maintain supply cuts Kuwait Central Bank Implements Measures to Boost National Currency Attractiveness Overuse of financial sanctions risks dollar’s role Oman working to intensify south-south cooperation: Sayyid Badr Surge in Individuals Making Additional National Insurance Payments
