According to Goldman’s report on Sunday, the impact of the tariffs could be blunted by a 2 trillion yuan (US$275 billion) fiscal package from Beijing to support the economy and consumer consumption.
Goldman cut its 12-month growth estimate for the MSCI China Index to 10 per cent from 16 per cent, while the outlook for the CSI 300 Index of the largest stocks in Shanghai and Shenzhen was reduced to 17 per cent from 19 per cent.
The New York-based investment bank said the average earnings per share growth for Chinese stocks for the next 12 months would be 7 per cent, down from 9 per cent, while the price-to-earnings ratio for the MSCI China gauge would be lowered to 11.5 times from 12 times.
The revision reflects a “high degree of uncertainty as [a] new trade war and possible negotiations unfold,” adding that a bull run for Chinese stocks would “slow on event risks and profit-taking pressures”, according to the report, written by Kinger Kau, Timothy Moe, Si Fu and Kevin Wong.
The revisions were tempered from a more bullish position in February, after DeepSeek, an artificial intelligence start-up on the mainland, released powerful but cost-effective large language models. The breakthrough spurred the Hang Seng Index to jump 15 per cent in the first quarter after rising 18 per cent last year.
Goldman made its revision after US President Donald Trump raised tariffs on most of the country’s trading partners, including China. China quickly retaliated by applying 34 per cent tariffs on all US imports.
