Investing.com – Chinese stock markets have retreated from 2024 highs in recent weeks as a stellar two-month rally fueled by overt optimism and stimulus now appears to be winding down.
But Goldman Sachs analysts said the recent pullback had not changed their bullish view on Chinese stocks and that they remained overweight on the country’s blue-chip stocks.
China’s indexes have fallen 2% to 4% over the past two weeks from 2024 highs after rising nearly 20% since February. This was driven in part by profit-taking that prompted some correction, renewed concerns over trade tensions between the US and China, and as investors waited to see how Beijing would finance and implement its latest line of stimulus measures, particularly those aimed at the real estate market. .
GS analysts said they remained bullish on Chinese stocks, favoring service economy sectors, consumption-oriented stocks and stocks with high potential for global expansion.
They also remained focused on extracting profits from large Chinese firms and sought to increase shareholder returns such as share buybacks and dividends.
GS expects the CSI300 index to grow by 12% over the next 12 months.
Analysts said the outlook for Chinese markets remained positive despite what they saw as a clear shift in policy, particularly regarding the property market.
The upcoming Politburo meeting in July is expected to provide more signals.
They also said Chinese stocks have become less sensitive to tensions with the US, although the upcoming 2024 presidential election remains a focus due to potential volatility.
The earnings outlook for Chinese equities also remains mixed, with particular focus on whether real estate earnings will stabilize thanks to a new wave of government support.