Goldman Sachs analysts have highlighted potential challenges for Chinese equities if Donald Trump wins the presidency and implements his proposed steep tariffs. According to Goldman Sachs (NYSE:GS), the imposition of Trump’s proposed 60% tariffs on Chinese goods could significantly impact the Chinese economy, particularly if no countermeasures are taken.
The analysts predict that Chinese sectors reliant on exports to the U.S., such as technology hardware, capital goods, transportation, and durable goods, are likely to face difficulties. Conversely, consumer technology, consumer services, and energy sectors are expected to fare better under a Trump administration.
Goldman Sachs has maintained its baseline earnings, valuations, and fair value forecasts for China, citing the current uncertainty regarding the White House’s future stance towards China. The analysts noted an inverse correlation between Trump’s presidential prospects and Chinese equity performance. As Trump gains in the polls, Chinese markets have shown signs of strain.
Historical trends reveal that Chinese defensive stocks, such as those in energy and traditional cyclical industries, have performed well, while technology and consumer stocks have struggled. Goldman Sachs estimates that Trump’s proposed tariffs could reduce corporate profits among Chinese exporters to the U.S. by around 13%.
Chinese stock indices, including the Shanghai Shenzhen CSI 300 and Shanghai Composite, have recently fallen to five-month lows due to rising uncertainties surrounding the U.S. presidential election. Trump currently leads Democratic contender Kamala Harris, who recently received President Joe Biden’s endorsement after he exited the race. However, recent polls indicate a close contest between Trump and Harris, with the latter gaining ground.
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