Goldman Sachs Executive: There is still room for growth in the Chinese stock market

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Goldman Sachs executives say the rally in Chinese stocks is likely to continue, and investor sentiment has already improved significantly.

On September 3, Kevin Sneader, President of Goldman Sachs Asia Pacific, said in a media interview:

What we are hearing from clients and investors is that sentiment (around the Chinese stock market) has improved.

Sneader said that while some long-term investors are still seeking clearer policy signals, capital inflows from hedge funds have already improved.

Sneader added that besides institutional funds, the main driving force behind the stock market rally remains the large number of individual investors in China with significant savings.

Data from July shows that Chinese household deposit balances dropped 0.7% from a record high in June to 160.9 trillion yuan, indicating that individual investors are moving funds into the market. Previously, JPMorgan predicted that from July this year to the end of next year, about 2.5 trillion yuan of additional savings could flow into the stock market, pushing stock prices up by over 20%.

Chinese stocks have performed strongly recently, with the CSI 300 Index rising around 10% since the end of July, while the MSCI ACWI Index rose just 1.6% over the same period.

Expectations that breakthroughs in artificial intelligence and efforts to cut excess capacity will revive growth have fueled this rally.

Last week, Wallstreetcn pointed out that Mark Wilson, a top trader at Goldman Sachs, noted that Chinese stocks remain undervalued, with low holding ratios, while trading momentum continues to strengthen. This market condition itself could drive a self-reinforcing effect in the stock market, creating reflexivity.

In addition, from a longer-term perspective, net long positions in the Chinese stock market remain at a low level (only at the 56th percentile in the five-year range).

Since August, Goldman Sachs’ proprietary business has recorded its highest ever net capital inflow, mainly from long buying. Overall, the low valuation and increasing trading activity in Chinese stocks are worth attention.

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