Goldman Sachs is optimistic about Chinese stock market 2-3 months after the US election

　　Global financial markets are “twitched” by the upcoming U.S. election, and Chinese investors are no exception. The results of the U.S. election will have a huge impact on China's stock market trend. If former President Trump wins, there could be a “knee-jerk reaction” in markets. Strategists at Goldman Sachs Group Inc. recently predicted that Chinese stocks will rise within two to three months after the U.S. presidential election.

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Chinese stocks are resilient

　　Hong Kong and City A indexes closed in the green for two consecutive days. In the past two trading days, the Shanghai Stock Exchange Index has fallen by 1.68%, the Shenzhen Component Index has fallen by 1.45%, and the ChiNext Index has fallen by 3.48%. The Hang Seng Index has fallen by 1.06%, the China National Index has fallen by 1.42%, and the Hang Seng Technology Index has fallen by 1.32%. Data show that the A-share CSI 300 Index has risen by about 23% since its September low, making it one of the world's best-performing major indexes in the past three months.

　　Goldman Sachs reported on Wednesday: “Chinese stocks have not sold off during Trump's risk repricing over the past two weeks, suggesting resilience. We believe China risk sentiment may turn after the election Bullish.” Fears of a possible trade war following a Trump victory prompted investors to move away from risk assets.

　　Yesterday, Reuters reported that China is considering approving the issuance of more than 10 trillion yuan in bonds next month over the next few years to boost the economy. Liu Shijin, former deputy director of the Development Research Center of the State Council, responded today that the focus of his previous speech was not “10 trillion”, but “it is necessary to take short-term stimulus measures to stabilize the economy.” China's economic stimulus measures have created so-called “policy puts” that protect investors in China's stock market from declines. The stimulus comes at a cost, and we must use stimulus plus reform to spend money to build new systems to achieve high quality for the medium and long-term economy and society.

　　Goldman Sachs strategists believe: “Overall, policy puts are likely to be strong and persistent, especially if Trump wins.”

Goldman Sachs bullish on Chinese stocks

　　Since the Chinese government launched a series of major favorable policies, Goldman Sachs has repeatedly expressed its optimism on Chinese stocks. As early as October 5, the bank issued a report that raised Chinese stock ratings to “overweight” and said that after relevant policies and measures are implemented, the Chinese stock market is expected to rise by another 15%-20%. Goldman Sachs raised the target price of MSCI China from 66 to 84 and the target price of the CSI 300 Index from 4,000 points to 4,600 points.

　　In the interest rate market, Goldman Sachs' latest forecast is betting that the yuan will weaken within a year or so if Trump wins. If Harris wins, one should bet on a yuan rebound in the short term. Goldman Sachs continues to be bullish on the value of five-year Chinese government bonds.