Goldman Sachs says investing in China is more challenging now, but the country isn’t ‘uninvestable’
There are pockets of opportunities in China’s stock markets despite an increasingly challenging investment backdrop, says Goldman Sachs’ Timothy Moe.
“There are certainly a host of challenges that China is facing right now — but we would push back quite vigorously on the sweeping statement that China is ‘uninvestable,'” Moe, chief Asia-Pacific equity strategist and co-head of Asia macro research at the investment banking giant, told CNBC’s “Squawk Box Asia” on Friday.
“It’s just way too overarching and really misses a lot of the specificity that is needed to invest in China,” he said.
That narrative does not necessarily extend across the entire Chinese stock market, Moe said, adding that policy has in some cases served as a tailwind for some sectors.
He cited the example of “hard technology areas” such as semiconductors, where Beijing has clearly signaled it wants to become self-sufficient in.
In March, China’s largest and most important chipmaker Semiconductor Manufacturing International Corporation announced it was building a $2.35 billion factory in Shenzhen — a major technology hub in the country.
Other sectors that have benefited from policy include the new energy space that was “espoused” in Beijing’s 14th five-year plan, Moe said. Last year, Chinese President Xi Jinping announced plans for the country’s carbon emissions to begin declining by 2030, with the aim of reaching carbon neutrality by 2060.
“If you look at those parts of the market, they’ve done very well this year,” Moe said, though he acknowledged that the investment environment in China has “become more challenging.”
Concerns over an ongoing regulatory crackdown by Beijing have weighed heavily on Chinese stocks this year.
The CSI 300 index, which tracks the largest mainland-listed stocks, was down nearly 5% as of Friday’s close. In comparison, other major regional indexes such as Japan’s Nikkei 225 surged roughly 5% in the same period.
On Wall Street, the Dow Jones Industrial Average and S&P 500 have also sailed to record highs in recent days on the back of strong corporate earnings.
— CNBC’s Yen Nee Lee contributed to this report.