Goldman Raises China Stock Index Forecasts

Goldman Sachs (GS) on Monday raised its Chinese stock index forecasts for exchanges in the mainland and Hong Kong as stimulus measures revive the economy.

In a note released today, Goldman projected China’s CSI 300 Index (which tracks stocks traded on the two mainland exchanges in Shanghai and Shenzhen) to reach 2,600 pts by year-end, up from an earlier forecast of 1,980. The Hang Seng China Enterprises Index prediction was raised to 10,300 from 8,900 and the shares were upgraded to “overweight.”

From Bloomberg:

“China’s aggressive domestic policy stimulus appears to be working to offset the weakness in the external sector,” the note by strategists led by Hong Kong-based Timothy Moe said. “Greater confidence in Chinese growth also makes us incrementally more positive about the effectiveness of regional stimuli, and growth prospects.”
…
A resurgent China should assist the recovery of linked economies such as Hong Kong and South Korea, the report said. Corporate earnings are likely to stabilize and improve into 2010, the strategists said.

Last week Goldman increased its estimate for China’s economic growth in 2009 to 8.3% from 6%.

Comments

[Alan Young:]

While I like China to invest in, does anyone think for a minute that GS gives ratings of anything based on cool-headed objective analysis, independently of their own investment positions?
This tells me less about China than about GS: they went long China before the announcement, and will sell off when they've attracted enough suckers to run the price up more.
I wonder how long they'll keep getting away with these games.

Apr 27 09:24 AM

[WebWatcher:]

As remarked by Young, GS is not, and has not been for quite a while, providing an objective analysis. GS is very political in China, and very centered around their own interests directly or indirectly. It's sad to observe the loss of credibility of such a respectable firm.

Apr 27 09:39 AM

[Dustinian:]

Unfortunate but probably accurate.

Nevertheless, China's economic outlook HAS improved somewhat in the last couple months.


On Apr 27 09:24 AM Alan Young wrote:

> While I like China to invest in, does anyone think for a minute that
> GS gives ratings of anything based on cool-headed objective analysis,
> independently of their own investment positions?
> This tells me less about China than about GS: they went long China
> before the announcement, and will sell off when they've attracted
> enough suckers to run the price up more.
> I wonder how long they'll keep getting away with these games.

Apr 27 11:08 AM

[dragonpaw:]

Is there any analyst with any Wall Street firm that has ever given any "objective" analysis on any stock? Which brings to mind the old adage: Fool me once shame on you ; 'fool us thousands of times shame on us.'

Apr 27 12:11 PM

[thotdoc:]

I was thinking exactly the same as Mr. Young. But, I thought there is too much anti-bank stuff floating around in my head. Maybe I'm just being realistic. Thanks for voicing my thoughts,

G

Apr 27 06:38 PM