Goldman Sachs: "China Stock Market's 'Party Congress Rally Effect' Limited Due to COVID Impact"

Stock Prices Usually Rise 2% Before Party Congress
This Month They Fell Over 8%

[Asia Economy Reporter Koo Chae-eun] Goldman Sachs has predicted that the 20th National Congress of the Communist Party of China (Party Congress), which will serve as the 'coronation' of Chinese President Xi Jinping and opens on October 16, will have no 'stock market rally effect.'

According to Bloomberg on the 19th, Goldman Sachs strategists including Kinger Lau made this assessment in a report, citing China's adherence to the 'zero-COVID' policy and the sluggish real estate market as reasons.

Goldman Sachs noted that historically, the stock market showed strong upward momentum in the period leading up to major political events in China, but given the recent situation in China, it is uncertain whether such precedents remain valid.

The China stock index by Morgan Stanley Capital International (MSCI), a provider of stock indices, typically recorded about a 2% return in the month before the Party Congress in the past. However, this index has fallen more than 8% since the beginning of this month, showing weaker performance compared to other Asian and global stock markets.

Goldman Sachs pointed out that although the Chinese government is implementing fiscal and monetary expansion policies to stimulate the economy, the effectiveness is being offset by strict COVID-19 control measures.

However, Goldman Sachs does not expect drastic policy changes even after the Party Congress, and anticipates that once personnel reshuffles are confirmed, policy adjustments will improve.

This content was produced with the assistance of AI translation services.