Goldman Sachs Sees “Attractive Valuations” In Beaten Down Chinese Stocks

Goldman Sachs Sees “Attractive Valuations” In Beaten Down Chinese Stocks
Andrew Rummer

about 2 years ago1 min

Mentioned in story

After lagging many other markets around the world, Chinese stocks are looking like an attractive investment at current levels, according to a report this week from Goldman Sachs

As the chart shows, Chinese stocks – whether measured by the Shanghai Composite Index or the Hang Seng China Enterprises Index (HSCEI) – have had a tough time recently when compared to the rest of the world. 

Investors have fled China this year as authorities cracked down on high-flying companies this year, hitting ecommerce giant Alibaba with a huge antitrust fine and forcing taxi firm Didi to delist from the New York Stock Exchange. But after the drop in Chinese stocks, Goldman sees several reasons to be optimistic, including increased support from China’s central bank compared to the US Federal Reserve and limited spillover from the restructuring of property developer Evergrande

“Although risks around the Chinese growth outlook remain due to the zero-tolerance Covid-19 policies and regulatory tightening, Chinese equity markets already reflect some of those risks, offer attractive valuations and continue to be underinvested,” Goldman wrote. 

Finimizers who buy into the investment bank’s thesis could look for exchange-traded funds that track Chinese stocks, particularly the largest Chinese companies that have been hardest hit recently. Goldman also recommended gaining exposure to Chinese markets by buying long-dated call options on the HSCEI.

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