Goldman Sachs Raises Asia Stock Targets, Upgrades Hong Kong Amid Favorable Macro Environment and Lower Tariff Risk

Goldman Sachs strategists raised their 12-month target for the MSCI Asia Pacific ex-Japan Index by 3% to 700, implying a 9% return in dollar terms. They also upgraded Hong Kong stocks to market-weight, citing favorable macro environment and lower tariff risk. The team maintained an overweight stance on China, Japan, and Korea, while downgrading Malaysia to underweight.

Goldman Sachs Group Inc. strategists have significantly raised their forecast for Asian stocks, citing a more favorable macroeconomic environment and reduced tariff risk. The 12-month target on the MSCI Asia Pacific ex-Japan Index was increased by 3% to 700, implying a 9% return in dollar terms [1]. The team led by Timothy Moe highlighted the positive impact of a weaker dollar due to the Federal Reserve's easing cycle, which has benefited Hong Kong stocks, upgrading them to market-weight.

The strategists also noted that earnings growth will be a dominant driver of returns, with regional stocks' 14 times forward earnings ratio aligning with "macro-modeled fair value." Despite the potential for tariff rates to be above current baseline expectations, the team believes the fundamental growth impact may not be as negative as initially feared [1].

Goldman Sachs maintained an overweight stance on China, Japan, and Korea but downgraded Malaysian stocks to underweight, reflecting a preference for North Asian markets. This shift comes as the Hang Seng Index and the MSCI Hong Kong Index have each risen at least 18% since November, when Hong Kong stocks were downgraded due to weak property and retail sectors [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-11/goldman-strategists-raise-asia-stock-targets-upgrade-hong-kong
[2] https://finance.yahoo.com/news/goldman-sachs-gs-laps-stock-214504926.html