①Goldman Sachs raised the MSCI Emerging Markets Index target point to 1,220 points, as AI applications will enhance Chinese companies' profits, anticipating a 12% upside potential from Tuesday's close; ②Analysts pointed out three bullish catalysts for Chinese Stocks: increased fiscal stimulus, recovery in earnings per share growth, and potential tariff resolution.
Financial Association reported on March 6 (Editor: Liu Rui) that with the overnight surge,$NASDAQ Golden Dragon China (.HXC.US)$many analysts on Wall Street, led by Goldman Sachs, have become increasingly optimistic about the prospects for Chinese Stocks.
On Wednesday Eastern Time, Goldman Sachs raised the 12-month target point for the MSCI Emerging Markets Index from 1,190 points to 1,220 points, as the index considers the positive impact of AI applications on Chinese corporate profits.
The latest forecasts indicate that the MSCI Emerging Markets Index still has 12% upside potential from Tuesday's close.
Goldman Sachs strategists, including Sunil Koul, expect that as stimulus measures stabilize economic growth, Chinese Stocks will further increase. Additionally, the upward adjustment of the emerging market benchmark index's target price is also due to improved growth prospects in fiscal spending in the Eurozone.
Goldman Sachs stated that they prefer the 'less exaggerated' valuations of onshore A-shares.
The Chinese concept stocks sector rose broadly on Wednesday, with the Nasdaq China Golden Dragon Index closing up 6.4%, reaching a closing high since October of last year.$Alibaba (BABA.US)$Up nearly 8.6%, JD.com rose 6.8%.$Full Truck Alliance (YMM.US)$Up 13.8%.$PDD Holdings (PDD.US)$Up 6%.$Baidu (BIDU.US)$、$Bilibili (BILI.US)$Increase of over 5%.
Chinese Stocks face three major bullish catalysts.
Notably, the overnight Nasdaq Golden Dragon Index surged 6.4%, reaching a new closing high since October last year. Andrew Rocco, an Analyst from the leading investment research firm Zacks, commented that despite the escalating trade friction between China and the United States, Chinese stocks have surprisingly remained strong.
Andrew Rocco believes that there are three major Call catalysts currently driving Chinese stocks:
First is the increase in fiscal stimulus: Since last year, the Chinese government has been injecting funds into the economy, and Wednesday's data showed that the pace of government funding is accelerating. On Wednesday, China announced further implementation of fiscal stimulus measures and set this year's economic growth target at 5%.
Secondly, the earnings per share of the company have resumed growth: Analysts mentioned that the e-commerce giant.$BABA-W (09988.HK)$It is a typical example of Chinese Technology companies turning crises into stability. After five consecutive years of steady growth, Alibaba's growth stagnated from the end of 2020 to early 2023. However, Alibaba has begun to grow again, and Zacks Analysts predict that Alibaba's earnings per share will reach an all-time high in 2025 and 2026.
"While Alibaba is one of the best representatives of earnings growth in China, investors may receive more evidence of China's economic recovery when JD.com publishes its Earnings Reports in the coming days."
Additionally, a potential tariff resolution is also something to look forward to: While most investors believe that the direct impact of tariffs is negative for both countries, Trump may just be using tariffs as a negotiation tool. Analysts pointed out that because Chinese stocks have performed well in the face of tariffs, any easing measures regarding tariffs could lead to a surge in Chinese stocks.
Vey-Sern Ling, Managing Director of Union Bancaire Privee, commented on the latest economic targets announced at China's Two Sessions by stating:
"There is nothing to criticize. As long as there is a strong growth target and a clear intention to support the economy, this should reassure the market."
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Editor/ping