GOLDMAN Sachs Group turned more bullish on Chinese stocks, as a softer approach by the government will ease pressure on the economy and improve poor valuations. Goldman expects a better year for Chinese equities, with onshore and offshore stocks to return 16 percent and 13 percent in the next 12 months, respectively, it said in a report. It also upgraded offshore stocks to overweight after lowering them to market-weight in July. “We believe modest policy easing to soften domestic macro stresses and to ensure stability ahead of the 20th Party Congress will be the catalyst for a re-rating of Chinese stocks,” strategists including Kinger Lau wrote in a research note, referring to the twice-a-decade key event scheduled for the second half of 2022. Goldman is the latest to upgrade its view of battered Chinese equities, following similar moves by UBS Group and BlackRock Inc. The Hang Seng China Enterprises index, which tracks mainland companies listed in Hong Kong, is the worst-performing major equity index in the world this year. However, over the past five sessions it has been among the best performers. Investor sentiment has improved last week following a news report that regulators are considering easing rules for asset sales so that developers can avoid default. Regulators will pursue a stability-driven agenda ahead of the Party congress, including providing more clarity on rules for the technology industry, Goldman analysts said. Goldman also cited valuations for its bullish view, with Chinese stocks trading at discounts close to all-time highs compared with global peers. At the same time, global mutual fund allocations are near a record low, the U.S. bank said. (SD-Agencies) | 