Goldman Sachs China Weekly Kickstart: Markets Flat Into CNY Holidays; MSCI and HSI Review Results; 2026 PPI Forecast Raised
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Chinese equity markets were broadly flat into the Lunar New Year holidays, with MXCN and CSI 300 posting marginal moves of -0.2% and +0.4%, respectively. President Xi conducted his first domestic inspection of the Beijing Yizhuang IT Application Innovation Industrial Park. The People's Bank of China maintained a moderately accommodative tone in its Q4 monetary policy report. January CPI eased to +0.2% year-over-year, while PPI rose to -1.4%.
Goldman Sachs economists raised their 2026 full-year PPI inflation forecast to -0.5% from -0.7%, anticipating PPI inflation could turn positive as early as the end of the third quarter in 2026. Meanwhile, the State Administration for Market Regulation released antitrust compliance guidelines for internet platforms.
On the index front, MSCI announced its review results, effective February 27, which are expected to generate $1.4 billion in passive inflows for China. Hang Seng Indexes Company also released its quarterly review, effective March 6. Southbound Stock Connect recorded a robust net inflow of $3.6 billion for the week, bringing the year-to-date total to $20 billion. Sector performance showed healthcare and growth leading in Hong Kong, while communication services lagged. Currently, MXCN and CSI 300 trade at forward price-to-earnings ratios of 12.0x and 14.5x, respectively.