Goldman Sachs Predicts Limited Decline for Chinese Stocks Next Year

According to Goldman Sachs, Chinese equities are expected to face a limited decline next year as the market accounts for trade tension risks, while domestic stimulus measures provide a buffer against further sell-offs. Si Fu, Goldman Sachs' China portfolio strategist, stated in an interview with Bloomberg TV that while Donald Trump's planned tariffs on Chinese imports could affect earnings, "the market has already discounted valuations for companies that are vulnerable to these risks." He also noted that U.S. investors have been reducing their holdings in these related companies.

Market participants are anticipating more concrete measures to boost consumption following an unexpectedly weak growth in retail sales in China in November. Si Fu mentioned that stock valuations have fallen from their peak in October, and the current levels could be well supported by potentially improving fundamentals for companies.

Goldman Sachs forecasts a 7% earnings growth for the MSCI China index in 2025 and a 10% expansion in 2026. The index has risen over 15% this year, marking its first annual gain in four years. In a possible scenario where the U.S. increases tariffs on Chinese goods by 60%, Si Fu expects a 10% depreciation from current levels. Goldman strategists also foresee additional measures to support consumption from the government, including more coupons and subsidies in the coming year.