China's big market drop shouldn't lure investors, with the country facing a decade of slowing growth, Goldman Sachs wealth CIO says
- Investors shouldn't return to China, no matter how cheap it appears, Goldman Sachs Wealth Management CIO said.
- Unclear policies and an expected economic downturn over the coming decade are deterrents.
Investors should not be lured back to China's markets because they look cheap following a steep plunge in the last year, Goldman Sachs Wealth Management CIO Sharmin Mossavar-Rahmani said.
"All our clients are asking us that question, given how cheap China appears, people inevitably say, well, has it discounted the worst news?" Mossavar-Rahmani said in a Bloomberg Television interview on Monday, warning that "our view is that one should not invest in China."
The major underlying factor for investors to consider is China's trajectory over the coming decade, and the country's current economic woes and unclear long-term policy solution suggest the path ahead will be difficult for years to come.
"If we think of the three pillars of property, infrastructure and exports, we think all those pillars are substantially weakened, and so we don't recommend clients move into China at this point," she said.
Mossavar-Rahmani said that despite the country's recent "short-term stimulus measures," China's opaque economic regulations not only add uncertainties to when the bottom would be reached in the real estate market, but also "put a little bit of a cap on the equity market data."
The world's second-largest economy has just unveiled a 5% growth forecast for 2024, following a 5.2% expansion in 2023, but economists remain skeptical about this ambiguous goal, citing China's sluggish property sector, government debt crackdown, potential new energy sector investment slowdown, and weak January-February figures.
Mossavar-Rahmani further said that there is skepticism around China's 5.2% growth last year, adding that it is likely "a lot weaker."
"We really don't have a good grasp of what growth was last year, or what growth will be this year."