Goldman Sachs CEO David Solomon said global investors are gradually returning to Chinese equities following years of steep market losses, and he expects the recovery to extend into 2026.
We always welcome optimism for the future, but we also feel a level of skepticism is warranted overall about statements like these given the general sense of the China economy at the moment, particularly given that Goldman Sachs have a vested interest in being optimistic.
China’s stock market is not really reflective of the real economy in the same way that other international markets are. Much of the investment happening in the country is government driven, whether that be in infrastructure, manufacturing or AI, and while that can lead to a boost in the market, it does not necessarily indicate demand or a growth in investor confidence.
For example, Deloitte China recently announced that they would hire 1,000 staff in Hong Kong, a tangible commitment representing a belief in the economy there. But such tangible indications of intent are few and far between, and this is the sort of thing that leads us towards skepticism.