Goldman Sachs once again is bullish on Chinese assets, giving A and H shares an "outperform the market" rating.

Goldman Sachs stated in its latest report that it gave A-share a "outperform market" rating, considering that the atmosphere in the A-share market is more beneficial from policy stimulus, and the strategic allocation is higher than H-share. Liu Jinjin, Chief Stock Strategy Analyst of Goldman Sachs China, pointed out that overseas investors are now concerned about the risk of a recession in the United States, coupled with the need to diversify risks after being heavily invested in US stocks for many years, attracted by the valuation of Chinese stocks, and looking forward to the mainland's large-scale stimulus policies for the economy. Therefore, they intend to reinvest their funds in China. Goldman Sachs predicts that in the next 12 months, the MSCI China Index has a 12% upside potential, and the CSI 300 Index has a 15% upside potential. Goldman Sachs points out that as global funds further increase their allocation in the Chinese market, H-shares may continue to be favored, but A-shares will also be supported by the active participation of domestic retail investors. The bank is optimistic about the performance of the consumer sector, believing that further improvements in consumer and real estate sectors will drive the market higher. Goldman Sachs also notes that small-cap stocks may perform better, especially indices such as the ChiNext Index, the Growth Enterprise Market Index, and the CSI 1000 Index. As for Hong Kong stocks, Goldman Sachs believes that the current price-to-earnings ratio of Hong Kong stocks is about 10 times, which is significantly lower than that of US stocks, making it more attractive. Hong Kong has large technology companies that mainland China lacks, attracting mainland investors to invest in the south, supporting Hong Kong stocks. However, one should consider the stimulus effect of economic policies on the stock market, where A-shares will benefit more and H-shares will be more affected by external factors. Howeve, A-shares have not performed as well as H-shares since the beginning of the year, which is another reason why Goldman Sachs is optimistic about the short-term trend of A-shares.