Chinese stocks appear to be emerging from their post-pandemic slumber thanks to an AI game-changer that could help lure in $200 billion of investor money this year.
That’s according to Goldman Sachs strategists, who on Monday bumped their target on China’s CSI 300 index, up 0.3% so far this year, to 4,700 from 4,600, which they say implies a 19% price return from current levels.
“We estimate widespread AI adoption could boost Chinese EPS \[earnings per share\] by 2.5%/year over the next decade. Improving growth prospects and perhaps a confidence boost could also raise the fair value of China equity by 15-20%, and potentially usher in over US$200 billion of portfolio inflows,” said a team of strategists led by Kinger Lau.
But they are cautious. “As promising as AI could be to China’s growth trajectory, we believe forceful policy stimulus is still required to address deep-rooted macro challenges and drive sustainable equity gains.”
Specifically, they say China needs fiscal stimulus to soften headwind tariffs, help drive a rotation from external to domestic demand, “circuit-break the disinflationary spiral,” and address other macro imbalances, all of which will support earnings and help lengthen a rally.
[Full Article](https://www.marketwatch.com/story/goldman-says-ai-could-be-a-200-billion-game-changer-for-china-markets-but-heres-why-investors-shouldnt-rush-in-3882f821?mod=home-page)