Goldman Sachs has upgraded shares in India, citing the
market’s strategic appeal, healthy quarterly results and strong growth
prospects.
According to Goldman Sachs strategists, including
Timothy Moe, in their assessment of Asian markets, India is anticipated to
offer the “most promising long-term growth opportunities in the area,” with the
potential for mid-teens earnings growth in the coming years.
Goldman Sachs’ heightened focus on Indian shares can
be attributed to its strategic appeal, particularly driven by its “largely
domestic-oriented growth.”
This characteristic provides investors with a diverse
array of “alpha-generating themes,” including initiatives such as ‘Make-in-India,’
large-cap compounders, and mid-cap multibaggers.
Goldman Sachs’ upgrade of Indian shares reaffirms the
country’s growth potential, particularly when many major economies are
grappling with various challenges.
Not just Goldman Sachs, but several other major global
brokerages and investment banks have shared positive outlooks about India’s
markets and the broader economy.
In contrast, China has faced multiple downgrades this
year due to its slowing economic growth. Goldman Sachs strategists have revised
their ratings on China stocks traded in Hong Kong downward, citing weak
earnings growth and other factors.
The bank has downgraded Hong Kong-listed Chinese
companies to market-weight and Hong Kong firms to underweight.
It’s important to highlight that Goldman Sachs has
downgraded its outlook on China equities multiple times this year, primarily
due to ongoing weaknesses in the country’s stock markets.
In August, it lowered the full-year earnings-per-share
growth estimate for the MSCI China Index from 14 percent to 11 percent and
reduced the 12-month index target from 70 to 67.
Since then, the index has declined by nearly 3
percent.
Despite these frequent downgrades and the economic
slowdown, Goldman Sachs maintains an overweight position on Chinese onshore
shares.
The bank’s strategists suggest that sectors related to
China’s transition toward higher productivity and self-sufficiency, such as
artificial intelligence and new infrastructure, may offer promising
opportunities.
“These ‘alpha’ opportunities, which are more widely
present in the onshore market, counterbalance the structural challenges of
slowing growth stemming from the housing sector downturn, high debt levels, and
adverse demographics,” the Goldman strategists noted.
Agencies
