Goldman Sachs Wealth Management cautions against investing in China. Here’s why

The Chief Investment Officer of Goldman Sachs Group Inc.'s wealth-management business, Sharmin Mossavar-Rahmani, has issued a stark warning against investing in China, despite recent significant declines in the country's stock market.

In a Bloomberg Television interview, Mossavar-Rahmani acknowledged the common perception of China's apparent cheapness but emphasised, "Our view is that one should not invest in China."

Citing multiple reasons for this stance, Mossavar-Rahmani expressed concerns about China's economic trajectory over the next decade.

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She highlighted anticipated challenges in the three pillars of China's growth - the property market, infrastructure, and exports.

Additionally, a lack of clarity in China's policymaking, coupled with inconsistent economic data, further raises apprehensions about investing in the country.

The Goldman Sachs executive pointed out uncertainties in China's policy direction, particularly regarding information security measures and restrictions on data removal from the nation.

The recent suspension of some unemployment figures by the statistics bureau and the discontinuation of annual press briefings by China's premier have contributed to the lack of clarity.

Mossavar-Rahmani noted, "It is not clear what the overall general direction of policy will be long term," adding that such policy uncertainties can cap the equity market.

China's benchmark CSI 300 Index experienced a significant dip last month, hitting a five-year low amid concerns about domestic demand and escalating geopolitical tensions.

While it has rebounded after regulatory interventions, Mossavar-Rahmani remains sceptical.

She anticipates potential short-term stimulus measures but suggests that China's real estate sector has not yet stabilised.

Expressing doubt about China's official economic expansion figures, she highlighted the lack of clarity in economic data, resonating with concerns among several economists.

Despite China's formal publication of a growth rate above 5 per cent for 2023, Mossavar-Rahmani stated, "most people think that is not the real growth number — it was actually a lot weaker."

She concluded by reiterating Goldman Sachs' cautious stance, emphasising that they do not recommend clients move into China at this point.

(With inputs from Bloomberg)