Goldman has reduced its 12-month growth forecast for the MSCI China Index to 10 percent from 16 percent.

Goldman Sachs
lowered its 2025 growth projection for
Chinese stocks
after the US
unveiled higher tariffs
Regarding imports from the mainland, analysts stated that the Hong Kong stock market was expected to decline when trading started for the week.

Goldman’s report on Sunday suggests that the effects of the tariffs might be mitigated by a fiscal stimulus package worth 2 trillion yuan (approximately US$275 billion) planned by Beijing to bolster economic growth and consumer spending.

Goldman revised its 12-month growth forecast for the MSCI China Index down to 10 percent from 16 percent. For the CSI300 Index, which covers major companies listed in Shanghai and Shenzhen, they lowered their projection to 17 percent from 19 percent.

Are you looking for insights into the most significant issues and developments globally? Find your answers here.
SCMP Knowledge
Our latest platform features handpicked content including explainers, FAQs, analyses, and infographics, all provided by our acclaimed team.

The investment bank based in New York stated that the anticipated earnings per share growth for Chinese equities over the coming year would decrease to 7 percent from 9 percent. Additionally, they revised their projection for the price-to-earnings ratio of the MSCI China index downward to 11.5 times, previously forecasted at 12 times.

The revision indicates a significant level of uncertainty due to “[a] potential new trade war and upcoming negotiations.” The document, authored by Kinger Kau, Timothy Moe, Si Fu, and Kevin Wong, suggests that this could cause the rally in Chinese equities to decelerate because of increased event risks and pressure from profit takers.

The changes were moderated from a more optimistic stance in February, following the release of powerful yet affordable large language models by DeepSeek, a Mainland-based AI startup. This advancement led the Hang Seng Index to surge by 15 percent in the first quarter, building upon its 18 percent growth from the previous year.

After U.S. President Donald Trump increased tariffs on numerous trading partners such as China, Goldman revised its forecast. In response, China promptly imposed a 34 percent tariff on all American goods entering their market.

Since President Trump announced the new tariffs, the MSCI China Index has fallen by 2 percent, whereas the S&P 500 declined by 6 percent. Notably, Hong Kong’s stock exchange remained shuttered on Friday due to a public holiday, with major exchanges on the Chinese mainland also being closed.

Kenny Tang-hing, who chairs the Hong Kong Institute of Financial Analysts and Professional Commentators, anticipated that the Hang Seng Index would fall between 1 percent and 4 percent on Monday, landing within a band of 22,600 to 22,000 points.

Tang noted that the Hong Kong and mainland stock markets are anticipated to exhibit greater resilience compared to US stocks, as the Chinese government has the ability to implement policies aimed at enhancing domestic trade and consumption.

The U.S. stock market faces further declines due to escalating tariffs adding to inflationary pressures, coupled with potential economic downturns this year.

The Goldman report indicated that the likelihood of a U.S. economic downturn within the coming year has increased to 35 percent from 20 percent due to a tougher environment for growth and inflation expectations.

It anticipated that China would boost its fiscal deficit as a percentage of GDP to 13.8% from 12.6%. Additionally, it mentioned that Beijing might implement extra fiscal stimulus amounting to 2 trillion yuan (US$275.2 billion).

“Our economists believe Chinese policymakers could dial up the policy easing intensity to soften the tariff headwinds, and to help facilitate the rotation from external demand to domestic consumption,” the Goldman said.

It was anticipated that the yuan would depreciate to boost exports, impacting offshore-listed Chinese firms quoted in Hong Kong and U.S. dollars elsewhere.

More Articles from SCMP

Hong Kong triathletes win sprint relay bronze medal, call China ‘the team to beat’ after performance says ‘incredible’

How China and Laos Are Tackling Food Security Head-On

‘They will never use Signal for something like this again’: Dennis Wilder

The refurbished Mong Kok Market Complex in Hong Kong will temporarily accommodate a health center.

The article initially appeared on the South China Morning Post (www.scmp.com), which is the premier source for news coverage of China and Asia.

Copyright © 2025. South China Morning Post Publishers Ltd. All rights reserved.