Goldman Sachs has upgraded its outlook on Indian equities, citing the stock market’s strategic appeal that is driven by the large domestic market of the fast-growing economy amid a global slowdown.
According to the latest Goldman Sachs assessment of Asian markets, India is anticipated to offer the “most promising long-term growth opportunities in the region, with the potential for mid-teens earnings growth in the coming years”.
Goldman Sachs sees the “largely domestic-oriented growth” providing investors with a diverse array of “alpha-generating themes”, including initiatives such as ‘Make-in-India’, large-cap compounders, and mid-cap multibaggers.
On the other hand, Goldman Sachs has downgraded its rating g on Hong Kong-traded China stocks due to low earnings growth.
The bank has lowered Hong Kong-listed Chinese companies to market-weight and Hong Kong firms to underweight.
The bank has red-flagged structural challenges of slowing growth in the China’s economy emanating from the housing sector downturn, high debt levels, and adverse demographics
At the same time, Goldman Sachs remains overweight on Chinese onshore shares.
Sectors related to China’s rebalancing toward areas of higher productivity and greater self-sufficiency such as artificial intelligence and new infrastructure might have a good run, according to the bank’s strategists.
