Goldman Sachs lowers the target price for the MSCI China Index and the CSI 300 Index by 5% and 4%, respectively, while still urging to increase holdings in A-shares and H-shares

Affected by the impact of oil prices, Goldman Sachs previously lowered its forecast for China's real GDP growth by 20 basis points. The bank believes that while the direct impact of high energy prices on the Chinese economy is relatively controllable, factors such as spillover effects, more persistent U.S. interest rates, and a stronger U.S. dollar may negatively affect the Chinese stock market.

The bank estimates that global adverse factors will cause the fair value of the Chinese stock market to decline by about 5%, with earnings impacted by 2 percentage points and the price-to-earnings ratio (PE) dropping by 3 to 4%. Therefore, the bank has lowered its target for the MSCI China Index and the CSI 300 Index by 5% and 4%, respectively, implying 12-month price returns of 24% and 12%.

The bank believes that a fully-fledged global recession or stagflation scenario has not yet been fully reflected in prices. However, in the Asia-Pacific market (excluding Japan), Goldman Sachs still maintains an "overweight" rating on A-shares and H-shares due to their favorable risk-return profile. The bank recommends that investors establish strategic positions at current price levels and reiterates its strategic optimistic view on its selected AI investment portfolio and the China "14th Five-Year Plan" investment portfolio, which includes a significant number of representative stocks from the AI power and alternative energy value chain.

Goldman Sachs also downgraded the rating of the Indian stock index (Nifty 50) to "in line with the market," while the Philippine stock index was downgraded to "underweight."