Goldman Sachs signals caution towards China’s stock market amid its downturn. Sharmin Mossavar-Rahmani of Goldman Sachs advised against investing in China during a Bloomberg interview.
She underscored the investment risks, despite the market’s recent dips. Furthermore, Mossavar-Rahmani is concerned about China‘s economic future.
She attributes her caution to challenges in real estate, infrastructure, and exports—China’s growth engines.
She pointed out, “Policy ambiguity and inconsistent economic data in China raise investment concerns.”
Mossavar-Rahmani also highlighted uncertainties in China’s policy, especially around data security and data export restrictions.
“The long-term policy direction is uncertain,” she remarked, noting how political uncertainties can constrain the stock market.
In February, the CSI 300 index saw a five-year low, driven by domestic demand worries and rising geopolitical tensions.
China’s real estate sector, while somewhat recovered, remains unstable despite short-term regulatory interventions favoring institutional buying.
“The economic data lacks clarity,” Mossavar-Rahmani added, reflecting widespread skepticism about China’s reported economic growth.
Despite China’s claim of over 5% growth in 2023, she believes the real figure is much lower.
China aims for about 5% growth this year amid job market concerns, planning to create 12 million urban jobs and maintain a 5.5% urban unemployment rate.
Chinese PM Li Qiang: Fiscal policy proactive, monetary policy prudent. 3% deficit-to-GDP ratio, $26B government deficit increase.
China’s 2023 foreign direct investment fell 81.7%, the lowest since 1993, with liabilities up $33B, per State Administration of Foreign Exchange.
This backdrop highlights the complexities and uncertainties facing investors in China, underscoring Goldman Sachs’ cautionary stance.