Goldman Sachs latest shout: China's stock market enters a new stage of "growth driven", expected to rise by 30% in the next two years!

Goldman Sachs' latest research report predicts that with the support of market-oriented policies, corporate profit growth, and strong fund inflows, China's benchmark stock index is expected to achieve a 30% increase by the end of 2027. "We now believe that the upward trend in the Chinese stock market will be more sustainable," strategists including Kinger Lau wrote in a report released on Wednesday. Currently, the Chinese stock market is entering a phase of steady upward climb with smaller fluctuations, signaling a shift from expectation-driven to growth-driven market cycles. Last month, Goldman Sachs strategists stated that given the current low valuations of the Chinese stock market and potential for increased allocation from both households and institutional investors, investors should adopt a "buy on dips" strategy for Chinese stocks. In July of this year, the institution raised its 12-month target for the MSCI China Index from 85 points to 90 points, citing improved prospects for the US-China trade agreement. The MSCI China Index broke through this target in early October but has since experienced a pullback. Following a cooling off of the bullish sentiment driven by artificial intelligence, the index may see its first monthly decline in nearly six months. Currently, investors are closely watching the Fourth Plenary Session of the 19th Central Committee of the Communist Party of China and the meeting between the leaders of China and the US this month for clues about the market outlook. Goldman Sachs points out that demand-side stimulus policies, profit growth driven by the development of artificial intelligence, and continued inflow of funds from both domestic and foreign sources are jointly driving the Chinese stock market. The bank expects the average annual growth rate of Chinese corporate profits to reach 12% in the next three years, and stock valuations are expected to increase by 5%-10% from current levels. However, strategists also caution that the fourth quarter may see a cyclical economic slowdown and the re-escalation of tariff risks, which "may serve as reasons for investors to take profit." Unless these issues worsen further, "we still recommend maintaining positions and opportunistically adding to positions during market pullbacks."