- The CSI 300 Index fell 5.5% over the past week and Hong Kong’s Hang Seng was down 5% over the same period as investors became increasingly worried over tighter regulation of domestic companies, especially in the education space.
- Goldman is remaining overweight on Chinese stocks, partially because they see them getting a boost from potential fiscal-policy easing.
- Some sectors are particuarly “growthy” to Goldman’s analysts: software, semiconductors, (green) energy/utilities, and autos.
Chinese stocks absorbed one of their worst routs in years this past week as regulators stepped up their efforts to rein in the activities of everything from technology companies to education firms, spooking investors and wiping billions of value off the stock market.
Goldman Sachs this week slashed its forecast for Chinese stocks in light of the crackdown which it called “unprecedented in terms of its duration, intensity, scope, and the velocity of new policy announcements.”
A more uncertain regulatory environment has sent volatility skyrocketing and made certain parts of one of the world’s most valuable equity markets “uninvestable,” in their words. But Goldman’s Asia equity analysts say there are still plenty of good reasons for global investors to have top-notch Chinese stocks as part of their portfolios.
