The average annual increase this year and next is 15% to 20%! Goldman Sachs shouted: Overweight Chinese stocks!

# Source: Wall Street Insights  By Bu Shuqing

Goldman Sachs believes that the upward momentum of Chinese equities will mainly come from two aspects: first, the substantial improvement in corporate profitability driven by AI expansion and the "anti-cutthroat competition" initiatives, with profit growth rates expected to reach 14% and 12% in 2026 and 2027 respectively; second, the revaluation of the valuation system, which is projected to bring about an approximate 10% increase in valuations. Currently, Chinese stocks are still trading at a significant valuation discount.

The appeal of Chinese equities is continuing to heat up.

In its newly released strategy report, the team of strategists led by Hui Shan at Goldman Sachs issued a strong bullish signal on Chinese assets, advising investors to **overweight** Chinese stocks in a regional context. The bank predicts that driven by the dual engines of corporate earnings growth and valuation recovery, Chinese equities will usher in a steady bull market in 2026 and 2027, with an expected average annual growth rate of 15% to 20%. On January 5, A-shares opened higher and moved upward throughout the day, with the Shanghai Composite Index achieving a 12-day winning streak, marking the longest consecutive rise since 1993, and rebounding above the 4,000-point mark.

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