Goldman Sachs Group Inc raised its rating on India’s stock market, citing its strategic attractiveness, while lowering its rating on Hong Kong-traded Chinese stocks, citing a likely consensus downgrade and sluggish profits growth.
According to Bloomberg, the global investment bank believes India would have “the best structural growth prospects in the region” with earnings growth in the mid-teens over the next two years.
According to the research, the strategic appeal of the Indian market is due to its mostly domestically driven growth, which provides investors with a diverse range of “alpha-generating”themes. This included Make-in-India, high cap compounders, and mid-cap multibaggers, according to Bloomberg, citing the Wall Street bank.
“These ‘alpha’ opportunities, which are more widely present in the onshore market, counterbalance the structural challenges of slowing growth stemming from the housing sector downturn, high debt levels, and adverse demographics,” Goldman Sachs said in a press release.
According to Bloomberg, Goldman Sachs believes that earnings will be the primary driver of returns in Asia markets, with values remaining reasonable in comparison to the macroeconomic backdrop. According to the study, the investment bank downgraded Hong Kong-listed Chinese companies to market-weight and Hong Kong enterprises to underweight.