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<Research>G Sachs Trims Targets for MSCI China Index/ CSI 300 Index by 5%/ 4%, Still Recommends Overweight on A-/ H-Shrs
Recommend 11 Positive 5 Negative 7 |
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Impacted by oil price shocks, Goldman Sachs recently lowered its forecast for China's real GDP growth by 20 bps. While the direct impact of persistently high energy prices on the Chinese economy is relatively manageable, spillover effects, more persistent US interest rates, and a stronger USD may still negatively affect the Chinese stock market. In Goldman Sachs' estimation, global adverse factors will send the fair value of the Chinese stock market tumbling by about 5%, with earnings impacted by 2 ppts and the P/E ratio dropping by 3-4%. As a result, the broker has cut its targets for the MSCI China Index and CSI 300 Index by 5% and 4%, respectively, implying 12-month price returns of 24% and 12%. Goldman Sachs believes that a fully-fledged global recession or stagflation scenario is not yet fully priced in. That said, it keeps an Overweight rating on both A-shares and H-shares in the Asia-Pacific (excluding Japan) market, in light of the favorable risk-reward conditions. AAStocks Financial News |
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