Catenaa, Monday, February 17, 2025 – Goldman Sachs raised its 12-month target price for Chinese stocks on Monday to bring in $ 200 billion in inflows, following the recent Artificial Intelligence(AI) boost.
In recent weeks Chinese tech stocks have been on a strong rally boosted by DeepSeek’s AI breakthrough and Goldman Sachs estimates that AI adoption could boost earnings growth and potentially bring in $200 billion of inflows.
Goldman raised its 12-month target price for China’s CSI300 index to 4,700 from 4,600. It also raised its price target for MSCI China to 85 from 75.
DeepSeek and a handful of other Chinese companies have reportedly developed sophisticated generative AI models at a lower cost than existing offerings.
Goldman Sachs Research said the development may spur faster adoption of AI and help the technology have a larger impact on global economic growth.
The breakthrough challenges the view that prohibitive investment costs are a barrier to entry for the largest, most powerful AI models.
“While it’s still being determined how Chinese researchers developed their AI technology and the full cost of it, a lower cost structure could help AI to develop and spread around the world more quickly, Joseph Briggs,” Co-Leader of the Global Economics team at Goldman Sachs, writes in the team’s report.
Hedge funds have been piling into Chinese equities at the fastest pace in months as bullishness on the DeepSeek-driven technology rally adds to hopes for more economic stimulus.
In contrast, India suffers a record exodus of cash on concerns over waning macro growth, slowing corporate earnings and expensive stock valuations.
China’s onshore and offshore equity markets have added more than $ 1.3 trillion in total value in just the past month amid such reallocations, while India’s market has shrunk by more than $720 billion.
The MSCI China Index is on track to outperform its Indian counterpart for a third straight month, the longest such streak in two years.
