Goldman Recommends Overweight China Stocks, Sees 15–20% Annual Gains in 2026–27
Goldman Sachs published a macro report titled "China 2026 Outlook: Exploring New Drivers," recommending an overweight position in Chinese equities for 2026. The bank expects China’s stock market to rise 15–20% annually in 2026 and 2027. Key drivers cited include structural upside in exports, a policy-supported investment rebound, stronger emphasis on services consumption (including incentives for more holidays and paid leave), and priority policies from the 14th Five-Year Plan such as building a modern industrial system and accelerating high-level technological self-reliance. Goldman’s equities strategy team previously flagged overweight positions in A-shares and Hong Kong stocks and noted earnings acceleration drivers: AI adoption, a renewed “going global” trend for Chinese firms, and policy measures to reduce domestic over-competition. The report also highlights that Chinese equities trade at a notable valuation discount versus global peers. The content is market information and not investment advice.
Bullish
Goldman Sachs’ recommendation to overweight Chinese equities and its 15–20% annual return projection for 2026–27 is a bullish signal for risk assets tied to China’s economic reopening and structural reforms. The report identifies concrete demand-side and supply-side catalysts—export upside, policy-led investment rebound, consumption shifts toward services, and explicit state support for industrial modernization and technological self-reliance—which can sustainably lift earnings. For traders, this can translate into: (1) short- to medium-term positive sentiment in A-shares and Hong Kong-listed Chinese stocks as positioning and flows adjust; (2) sector rotation opportunities into AI-related, export-oriented, and tech self-reliance plays; and (3) potential valuation rerating as discounts to global peers narrow if earnings accelerate. Past cases: positive sell-side calls combined with visible policy support (e.g., post-COVID stimulus phases) have led to multi-month rallies in Chinese equities and increased inflows into regional ETFs. Risks that could blunt the bullish impact include geopolitical tensions, a disappointing macro recovery, or policy execution shortfalls. Overall, the report is likely to support bullish positioning among traders, with increased volatility around policy updates and economic data releases.