Goldman strategists see tumbling China stocks rising 20% in 2025

GOLDMAN Sachs strategists are sticking to their bullish stance on Chinese stocks despite an ongoing rout, predicting that benchmarks will rise about 20 per cent by year-end.

Strategists led by Kinger Lau remain overweight on both onshore and offshore Chinese shares as the risk-reward ratio is still favourable, according to a note dated on (Jan 12). “The sentiment and liquidity backdrop may begin to improve in late 1Q 25 on better tariff and policy clarity,” they wrote.

The broker is sticking to its guns even though a similarly optimistic call in November looks increasingly at odds with recent market moves. The MSCI China Index tumbled into a bear market last week and the CSI 300 gauge lost more than 5 per cent in the first seven trading sessions of 2025, its worst such performance for any year since 2016.

Goldman recommends investors buy government consumption proxies, emerging market exporters which will benefit from a weaker yuan, as well as select tech and infrastructure names. Meanwhile, shareholder returns “should continue to prevail on record-breaking cash distribution and falling domestic rates”, they wrote.

In addition, the strategists also maintain an overweight call on online retail, media and healthcare stocks while upgrading consumer services shares to overweight.

HSBC Holdings is similarly optimistic, saying last week that it’s positive on Chinese stocks listed in Hong Kong given the “favourable policy rhetoric” in mainland China and a better economic growth outlook.

Back in November, Goldman predicted that Chinese shares could gain about 20 per cent over the next 12 months as authorities stepped up measures to support the struggling economy. The MSCI China Index has lost about 10 per cent since then as growth jitters, falling producer prices and the prospect of additional US tariffs unnerved investors. BLOOMBERG

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