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Will Goldman be right on China this year?

Despite China's consistently poor stock market track record, Goldman Sachs believes equities will get a boost this year on the back of an economic rebound helped by fiscal stimulus and easier monetary conditions.

A string of soft economic data in the recent weeks has raised expectations that Beijing may unleash fresh measures to support the world's second-biggest economy. Premier Li Keqiang said last week that necessary policies were in place and the government would push ahead with infrastructure investment, comments which analysts interpret as official concern about a slowing economy.

"I think the real catalyst here is we're going to see economic momentum improve from a low base, to something approaching the average level the government's looking for," Timothy Moe, chief Asia Pacific equity strategist at Goldman Sachs told CNBC on Wednesday.

"[Other] key reasons would be we're still at a low end of a three year trading range and valuations of course are very depressed," Moe added.

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The Hang Seng China Enterprises Index (HSCEI), which tracks Chinese stocks listed in Hong Kong, has rallied almost 8 percent over the past two weeks, and Goldman, which is overweight on China equities, believes it has further to go.

Goldman has been a China bull for some time now, but the market hasn't responded in kind. At the beginning of 2013, the bank predicted the MSCI China Index would rise over 8 percent for the year. The index, however, ended the year flat.

(Read More: Goldman on China stocks: Why we'll be right this time)

China stocks have been a major laggard in the recent years, down 13 plus percent over the past five years, compared with gains of 100 percent for global stocks over the same period, according to the MSCI All Country World Index.

More upside for India

Aside from China, Goldman also has an overweight rating on South Korea, Taiwan as well as India.

While Indian stocks recorded their best monthly gain since October last month, Moe says the rally still has more to go.

"There's a lot of debate in the market as to whether the market has gone too far, whether there's too much election froth and optimism in the market. There's likely to be some profit taking after the elections but our sense is there's a still good leg up after that," he said. The bank's 12-month target for the Nifty index is 7600, 13 percent higher than current levels.

(Read More: Rupee on a roll, but how far will it go?)

The market's rise has been helped by heavy foreign buying on expectations the opposition Bharatiya Janata Party (BJP) – which is viewed by many as more market-friendly – would win elections set to conclude by mid-May.

"If you get a strong showing (by the BJP) you get less political horse trading in the coalition that's formed, which means you can get more stuff done," he said.

(Read More: Emerging markets: Most-shunned to most-loved?)

In addition to the elections, the bank expects the economy will begin to pick up, helping to drive earnings growth in corporate India.

"We think the economy is starting to re-accelerate. I think there's a clear fundamental and cyclical kind of earnings driven reason to be more optimistic," he added.

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