Chinese stocks poised for ‘another leg up’ after ‘healthy correction’: Goldman Sachs
- Goldman and Bank of America analysts expect another bounce as July Communist Party meeting seen including more support measures
The recent pullback is “a healthy correction” as the stimulus-powered rally got overheated while the momentum from various measures has petered out, according to Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs. Further upside could be unlocked as policymakers announce more support, he added.
“It’s sort of [like] the market caught its breath, and we expect another leg up,” Moe said at a media briefing in Hong Kong on Tuesday.
The MSCI China Index, which tracks 702 Chinese companies listed at home and abroad, has corrected by 6.4 per cent since its peak on May 20 as renewed geopolitical tensions, patchy macroeconomic data and ongoing struggles in the property market prompted investors to take profits.
Meanwhile, the Hang Seng Tech Index, which tracks China’s tech heavyweights listed in Hong Kong, including Tencent and Alibaba, has declined more than 10 per cent since its most recent peak and briefly entered a technical correction on Monday.