Goldman Sachs Investment Expert Warns Against Investing In China: 'It Is Not Clear What The Overall General Direction Of Policy Will Be Long Term'

Sharmin Mossavar-Rahmani, the Chief Investment Officer (CIO) of Goldman Sachs Group wealth management, has cautioned against investing in China, citing unclear policy and economic data.

What Happened: Mossavar-Rahmani, in an interview with Bloomberg Television, advised clients against investing in China, despite the country’s current low valuation. She highlighted several reasons for her stance, including an anticipated prolonged economic slowdown and uncertainties surrounding China’s policy-making and economic data.

She stated, “It is not clear what the overall general direction of policy will be long term. Policy uncertainties generally put a little bit of a cap on the equity market.”

China’s benchmark CSI 300 Index recently hit a five-year low amid concerns about domestic demand and geopolitical tensions. Although the index has since rebounded after the regulatory intervention, Mossavar-Rahmani believes that the Chinese real estate sector has yet to reach its lowest point.

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She also expressed doubts about China’s official economic growth figures, echoing concerns raised by several economists. Despite the reported growth rate of over 5% in 2023, she suggested that the actual figure may have been considerably weaker.

Why It Matters: This warning from Goldman Sachs comes at a time when China is making significant moves to support its economy. The country has been offering “computing vouchers” to AI startups to counter the impact of U.S. chip restrictions. Additionally, China’s economy has been projected to overtake the U.S. as the world’s top economy by GDP as soon as 2037.

Despite these developments, Mossavar-Rahmani’s warning suggests that there are underlying concerns about the stability and transparency of China’s economic and policy environment, which could potentially impact investment decisions.

China’s financial sector has also been undergoing significant changes, with President Xi Jinping pushing for the enforcement of Communist Party principles and increased party influence in shaping the sector’s direction. These changes, along with the ongoing geopolitical tensions, could be contributing to the uncertainties highlighted by Mossavar-Rahmani.

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