Goldman Sachs Sees 10 Trillion Yuan Potential in Chinese Stock Market

Goldman Sachs has recently published a research report indicating that the Chinese stock market still has significant room for growth. The report attributes the current upward trend in the market to retail investor funds, but highlights that a substantial amount of "existing funds" have yet to enter the market. This potential influx of capital is expected to provide the necessary momentum for further market gains, particularly in the mid and small-cap sectors.

The report notes that currently, only 22% of household financial assets are allocated to stocks and related products. This suggests that there is a considerable amount of potential capital that could flow into the market, estimated to be over 10 trillion yuan. This data indicates that the structure of residents' asset allocation has room for adjustment, and the stock market has a significant capacity to absorb additional funds.

Goldman Sachs' analysis emphasizes that mid and small-cap stocks are particularly well-positioned to benefit from this potential capital inflow. The report points out that the market's strong momentum is reflected in the fact that approximately 90% of the constituent stocks of the major indices are trading above their 50-day moving averages. This indicates that the market's confidence is broadening, and investor participation is expanding.

The report also notes that the rapid growth of brokerage margin accounts and the significant increase in non-bank deposits in July further support this trend. The report concludes that the Chinese stock market has the potential for further growth, driven by the entry of a large amount of "existing funds" that have yet to enter the market. This influx of capital is expected to support further market gains, with a particular focus on the performance of mid and small-cap stocks. The report's findings suggest that the Chinese stock market remains an attractive investment opportunity for both domestic and international investors.