Goldman Sachs like yuan, China stocks higher - citing policy shifts, stocks low valuations

Goldman Sachs on China's currency and stock markets:

Chinese stocks may rally another 15%

• 12-month index target for the MSCI China Index to 80 from 70
• citing low valuations and multiple policy pivots in areas like housing, internet regulation and geopolitics
• expects further earnings Earnings A company’s earnings represent its profits or net benefits as a result of its operation.Earnings are the net benefits of a corporation's operation. Earnings can be calculated as EBIT, i.e. earnings before interest and taxes, and EBITDA, i.e. earnings before interest, taxes, depreciation, and amortization.Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share price A company’s earnings represent its profits or net benefits as a result of its operation.Earnings are the net benefits of a corporation's operation. Earnings can be calculated as EBIT, i.e. earnings before interest and taxes, and EBITDA, i.e. earnings before interest, taxes, depreciation, and amortization.Earnings are valuable tools for investors of company shares as they can often highlight a company’s financial standing and performance. Better performances can result in strengthened share price Read this Term upside for the nation’s internet sector given a faster-than-expected reopening, macro recovery and normalizing of regulations

USD/yuan seen rising to 6.5 by the end of 2023

From the report:

• “China looks well positioned across the growth, policy, and inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term cycles in a global context in 2023”

• “The prevailing market backdrop leads us to believe that the downside risk of maintaining underweight or shorting Chinese stocks is meaningfully higher than going long”