Goldman Sachs expects 11 percent returns from MSCI China in 2019

MSCI's China index should reap returns of 11 percent in 2019, investment bank Goldman Sachs said on Monday, though it warned that the world's second largest economy faced a challenging and uncertain macro backdrop. "Our economists look for 6.2 percent GDP growth in 2019, led mainly by investment amid slowing exports and consumption, near-term balance of trade risks for dollar/yuan moving to 7.1 in early 2019," Kinger Lau wrote in a note to clients.
A mix of growth/valuation, stabilizing equity demand and potential asset re-allocation flows from property could bring a bounce late in the first quarter, he said. "We like China A shares given its favorable risk/reward and inclusion-provoked inflows," he said, referring to the gradual inclusion of A-shares in global emerging market indexes. Goldman is overweight on both China A and MSCI China, he added. MSCI's China index has fallen more than 16 percent since the start of the year.