Investors Should Think More Structurally About Chinese Stocks, Goldman Sachs Says

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00:00We try to predict a more midterm like earnings growth or market upside because we think now

00:07it's kind of different. We recommend investors to think more structurally rather than the

00:12short-term trading opportunities. Over the past two years, a lot of time people said China

00:17has opportunities versus more trading opportunities last for a few months or a quarter. But this time

00:23we recommend that investors think more structurally because we think there were some structural

00:28earnings growth drivers, including AI anti-evolution, as well as going global theme, which tends

00:35to drive earnings by multiple years. So that's why we give a midterm like focus. Yeah, I like the way

00:42you mentioned it. It's a default mindset now. So you should just buy the dip. I mean, how there is a

00:46bit of a pullback that we're seeing. But when it comes to trade tensions, and we've seen flare-ups

00:52like this before, the moment that we talk about more export curbs and whether this meeting happens

00:56or not, doesn't that actually add to more volatility and maybe buy the dip might not be the best sort

01:01of strategy moving forward? We do think it will create some volatility, but that's also why we

01:07recommend investors to buy the dips because the volatility gives you the chance to get on the train.

01:13If we think about the long term, the key driver will still be earnings growth. So it depends if we can

01:19still expect the earnings growth to be there despite all the tensions, then that we can continue to be

01:26positive. So that's the story behind. If we look at the going global, which is most related to the U.S.

01:32China trade tension, we look at the past years. Actually, Chinese companies do manage to grow their

01:38overseas revenue despite all the tariff hacks. So that's why we turn to be a little bit more bullish,

01:43because despite the tariff, companies still gain market share through their competitiveness,

01:50price advantages, as well as their improving R&D intensity. So they improve the quality and

01:56the innovation capability. So that's why we are more positive in mid to long term. We acknowledge

02:02there could be volatility, there could be tensions, re-escalation, but we tend to think that more

02:08temporarily. So in terms of the types of companies that will likely deliver those earnings in the

02:15economy doesn't seem to be doing as well as expected. Do I look at companies then that have

02:21a large presence outside China because of the earnings driver from outside? Is that is that the

02:26thesis also? Yeah. Yeah. We do think people need to be selective, remain selective because it's not the

02:34whole economy are growing well. It's in the selective pockets they have more opportunities, including

02:41the AI, including the company going global, including the company which have anti-evolution efforts and

02:47make their margin improving. So these are the pockets we recommend investors to focus on rather

02:52than buying the whole markets.