Goldman Sachs has revised its outlook on Indian equities, emphasizing the strategic allure of the stock market fueled by the expansive domestic market within the rapidly growing Indian economy.
The investment bank's upgrade takes into consideration India's large domestic market, which remains robust even in the face of a global economic slowdown.
This positive outlook underscores the resilience and attractiveness of Indian equities as a strategic investment choice in the current global economic landscape.
According to the latest Goldman Sachs assessment of Asian markets, India is anticipated to offer the "most promising long-term growth opportunities in the region, with the potential for mid-teens earnings growth in the coming years”.
Goldman Sachs sees the "largely domestic-oriented growth" providing 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 has taken a different stance on Hong Kong-traded China stocks, opting to downgrade its rating due to sluggish earnings growth. The bank has adjusted its position on Hong Kong-listed Chinese companies to market-weight and Hong Kong firms to underweight.
The decision is rooted in concerns about the structural challenges facing China's economy, particularly stemming from a downturn in the housing sector, elevated levels of debt, and unfavorable demographics. These factors have contributed to a slowdown in economic growth, prompting Goldman Sachs to reevaluate its outlook on Hong Kong-traded China stocks.
Despite this caution, Goldman Sachs maintains an overweight position on Chinese onshore shares. The bank's strategists suggest that sectors associated with China's shift toward higher productivity and increased self-sufficiency, such as artificial intelligence and new infrastructure, may experience favorable performance.
This nuanced approach reflects the recognition of specific challenges in certain segments of the Chinese economy while identifying opportunities in areas aligned with China's broader economic rebalancing efforts.
(With Agency Inputs)