People walk along an elevated walkway as an electronic ticker displays the figures of the Nikkei 225 Stock Average, top, and the Hang Seng Index in the Lujiazui Financial District in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

China Among Bright Spots in Asian Markets in 2019, Goldman Says

(Bloomberg) -- Chinese stocks should outperform in Asia as a dimming economic outlook forces Beijing to take more aggressive measures to boost growth, according to Goldman Sachs Group Inc.

While Asian equities have overshot to the downside this year, returns in 2019 will be “fairly subdued,” Goldman Sachs’ chief Asia-Pacific equity strategist Timothy Moe told reporters in Hong Kong. Any rebound in the region’s stocks next year will likely be moderate as estimates on corporate margins were “too optimistic,” Moe said.

Goldman recommends buying beaten-up Chinese A-shares on the expectation that policy easing measures will start to lift markets in the first or second quarter of next year.

“Given quite a challenging global macro and growth environment we expect policy to be quite supportive and China to ease policy more aggressively in 2019,” said Goldman’s China strategist Kinger Lau.

Among other Goldman views:

  • The bank upgraded its recommendation on the Philippines to overweight and lifted Australia, Thailand and Malaysia to market weight, while cutting Hong Kong, South Korea and Taiwan to underweight
  • Expects U.S.-China trade concerns to intensify further, but there’s a good chance of a “pause” in the tariff dispute, Moe said
    • NOTE: Morgan Stanley upgraded its forecasts for emerging markets, saying the bear market is “mostly complete

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