From South China Morning Post: 2024-06-11 04:15:15

Chinese stocks are poised for a rebound after a recent pullback, with key supportive measures expected at a meeting in Beijing next month, according to Goldman Sachs and Bank of America. The market correction is seen as healthy, with potential for further upside as policymakers announce more support, says Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs. The recent decline in the MSCI China Index and Hang Seng Tech Index may be reversed with potential announcements at the upcoming third plenum meeting.

Goldman Sachs maintains a bullish view on Chinese equities, raising 12-month targets for the MSCI China Index and CSI 300 Index, citing earnings recovery and valuation expansion. The unmet price-to-earnings ratios and positive A shares guidelines announced in April support a potential valuation recovery. However, macroeconomic indicators, geopolitical tensions with the US, and economic uncertainties remain risks for the market.

The market is expected to trade sideways in the coming weeks while awaiting catalysts, as suggested by Winnie Wu, chief China equity strategist at Bank of America Securities. Despite this, signs of consolidation at a higher level and improving sentiment could attract more investors back to the China investment thesis.



Read more at South China Morning Post: Chinese stocks poised for ‘another leg up’ after ‘healthy correction’: Goldman Sachs