Goldman Sachs is projecting substantial growth for Chinese equities, anticipating the MSCI China index to appreciate by 20 per cent and the CSI300 by 12 per cent in 2026. This follows a strong performance in the past year, where these key benchmarks saw gains of 20 to 30 per cent, primarily driven by multiple expansion. Strategists at Goldman Sachs remain optimistic about both A-shares and H-shares in Asia, maintaining an overweight rating.
The firm’s outlook suggests a “slower bull market,” with earnings being the primary driver of the expected equity gains in 2026. Profit growth is expected to accelerate from 4 per cent in 2025 to 14 per cent in both 2026 and 2027. This growth is anticipated to be supported by advancements in artificial intelligence (AI), the “Going Global” initiative, and policies aimed at reducing over-competition.
Goldman Sachs believes that current valuations are reasonable relative to their macroeconomic forecasts. They noted that the potential upside from AI monetisation, policy stimulus, and liquidity overshoot still appears attractively priced. Regarding sector preferences, Goldman Sachs remains positive on the AI sector, upgrading hardware to overweight, in addition to internet.
They still prefer consumer services over goods, would focus on materials in cyclicals, and recommends maintaining an overweight position in insurance within the high-yield segment to begin the year.
