(Bloomberg) — Strategists at Goldman Sachs Group Inc. ( GS ) cut their targets for key Chinese stock indexes for a second time this month, citing heightened trade tensions with the US.
“US-China trade tensions have soared to unprecedented levels, prompting concerns about global recession, and decoupling risks between the two largest economies globally in other strategic cohorts, notably capital markets, technology, and geopolitics,” a team led by Kinger Lau wrote in a note Monday.
The 12-month target for the MSCI China Index was cut to 75 from 81, while that for the CSI 300 Index was lowered to 4,300 from 4,500. The new targets imply potential upsides of 12% and 15% respectively from closing levels on Friday.
Chinese stocks have taken a hit amid the escalating trade war between the world’s two largest economies, with Beijing’s latest retaliatory 125% levies on the US following President Donald Trump’s 145% tariffs on China. Concerns over a further escalation of trade tensions continue to weigh on investor sentiment.
The MSCI China Index rose as much as 2.6% Monday, as investors enjoyed some respite after the US announced a pause in tariffs for phones, computers and consumer electronics. The CSI 300 Index ( 000300.SS ) gained 0.2%.
Goldman Sachs has long been bullish, often going against the tide during the market’s multiyear slump. Lau lifted the target for the MSCI China in February to 85 from 75, expecting the emergence of DeepSeek to drive the rally in Chinese equities further. However, the index has fallen more than 8% since then as Trump threatened further tariffs on China.
The Goldman team trimmed its target to 81 on April 6, soon after Trump’s April 2 tariffs kicked in.
The strategists favor A shares over H tactically, and upgraded banks and developers to overweight, as they expect “decisive and forceful” policy changes to soften the trade shock.