economy
Goldman Sachs cuts Hong Kong stocks in favor of mainland China AI hardware plays
The investment bank on Wednesday cut its rating on H shares to market-weight from overweight, while staying overweight mainland China's A shares.
TL;DR
- Goldman Sachs now prefers mainland Chinese stocks (A shares) over Hong Kong stocks (H shares).
- The preference is driven by opportunities in artificial intelligence hardware companies, which are largely traded on the mainland exchange.
- Goldman Sachs raised its 12-month target for the CSI 300 index to 5,500, indicating nearly 12% potential upside.
- The MSCI China index (heavy in H shares) has seen its potential gains lowered, despite still offering an 11% upside.
- Year-to-date, the CSI 300 has gained over 6%, while the Hang Seng Index is up about 1.5%.
- The Hang Seng Tech index has fallen over 5.5%, while the ChiNext has surged over 25%.
- Beijing's AI policy emphasizes hardware development, leading to strong performance in "hard tech" stocks.
- Chinese AI stocks are considered substantially under-owned by international investors.
- Upcoming IPOs for chip and robot companies are expected on the mainland, not Hong Kong.