Goldman Sachs Says China Is Not “Investible”

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There are pockets of opportunity in Chinese equity markets despite an increasingly difficult investment environment, says Timothy Moe of Goldman Sachs.

“There are certainly a multitude of challenges facing China right now – but we would rather vigorously reject the general statement that China is ‘non-investable’,” Moe, chief Asia-Pacific equities strategist and co- head of macro research Asia at the investment banking giant, told CNBC’s “Squawk Box Asia” on Friday.

“It’s just too global and really lacks a lot of the specificity needed to invest in China,” he said.

That narrative does not necessarily extend to the entire Chinese stock market, Moe said, adding that politics has in some cases served as a tailwind for certain sectors.

He cited the example of “hard technology fields” such as semiconductors, in which Beijing has made it clear that it wants to become self-sufficient.

In March, China’s largest and largest chipmaker, Semiconductor Manufacturing International Corporation, announced the construction of a $ 2.35 billion plant in Shenzhen, a major technology hub in the country.

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Other sectors that have benefited from the policy include the new energy space which has been ‘married’ in Beijing’s 14th Five-Year Plan, Moe said. Last year, Chinese President Xi Jinping announced plans for the country’s carbon emissions to start declining by 2030, with the goal of achieving carbon neutrality by 2060.

“If you look at these parts of the market, they have performed very well this year,” Moe said, while acknowledging that the investment environment in China has “become more difficult”.

Concerns over Beijing’s ongoing regulatory crackdown weighed heavily on Chinese stocks this year.

The CSI 300 index, which tracks the largest listed stocks on the continent, was down nearly 5% at Friday’s close. By comparison, other major regional indices such as Japan’s Nikkei 225 jumped about 5% over the same period.

On Wall Street, the Dow Jones Industrial Average and S&P 500 also hit record highs in recent days thanks to strong corporate earnings.

– CNBC’s Yen Nee Lee contributed to this report.


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