Goldman Sachs has maintained its "overweight" stance on Chinese A-shares and Hong Kong stocks, citing AI-driven growth and liquidity as key catalysts. Analysts predict Hong Kong stocks will benefit more from AI advancements, while A-shares have room to catch up, potentially narrowing the valuation gap. With increased global fund exposure to China, Hong Kong stocks remain a preferred choice, though A-shares might gain momentum soon. Goldman expects A-shares to outperform Hong Kong stocks over the next three months, noting the valuation premium of A-shares over H-shares has narrowed from 34% to 14% in three months, indicating a potential 10% rise if valuations return to the past year's average.
Morgan Stanley recently shifted from a bearish to a more optimistic view on Chinese stocks, anticipating sustainable growth fueled by AI development. The firm's chief China equity strategist, Laura Wang, upgraded the MSCI China Index to "equal-weight" and raised the year-end targets for the Hang Seng China Enterprises Index and Hang Seng Index to 8,600 and 24,000 points, respectively. Wang emphasized the under-allocation by investors to China, suggesting significant room for increased investment.
Goldman Sachs' chief China equity strategist, Kinger Lau, raised the 12-month target for the MSCI China Index to 85 points and the CSI 300 Index to 4,700 points, indicating a 19% upside. Edward Cole from Man Group and Jason Hsu from Rayliant Global Advisors also expressed optimism, highlighting China's AI innovations as a driver for stock market growth.
