Goldman Sachs: Chinese Equities Rebound but Structural Dispersion Remains High
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Goldman Sachs reports that the MSCI China Index rebounded 3.1% after a 6.0% pullback, while the CSI 300 dipped 0.5%, indicating offshore assets remain more sensitive to policy and liquidity improvements. Recent policy moves include the PBOC conducting overnight reverse repos, the State Council focusing on AI and trade, and the CSRC drafting eased refinancing rules. However, geopolitical measures persist, evidenced by placing 20 Japanese entities on an export control list.
First-half performance revealed extreme dispersion. MSCI China underperformed major global markets, yet indices with high AI hardware exposure significantly outperformed. Southbound flows provided crucial support, injecting US$39 billion into Hong Kong equities.
Positioning shows room for recovery. Global active funds maintain conservative China allocations at 5.8%, but Asia ex-Japan and EM long-only investors are narrowing their underweight positions. Hedge funds increased gross allocation by 32 basis points to 7.8%, reaching the 97th percentile over five years.
Goldman's A-H rotation model suggests H-shares may modestly outperform A-shares over the next three months, supported by valuations and fundamentals. Investors should differentiate return drivers across hardware upstream, internet, consumption, and traditional cyclical sectors. Policy indicators require monitoring, particularly CSRC refinancing rules, National Team ETF flows, and the US-China Relations Barometer.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Exhibit 7
Exhibit 8
Exhibit 9
Exhibit 10
Exhibit 11
Exhibit 12
Exhibit 13
Exhibit 14
Exhibit 15
Exhibit 16
