Alibaba Wins Conviction Boost As China Eases Covid Lockdowns: Goldman Sachs

Goldman Sachs Group, Inc GS said Chinese stocks might rally another 15%, while the yuan could hit April 2022 levels on the nation's reopening and critical policy shifts.
The brokerage analysts, including Kinger Lau, raised its 12-month index target for the MSCI China Index to 80 from 70, citing low valuations and multiple policy pivots in housing, internet regulation, and geopolitics, Bloomberg reports.
Separate Goldman analysts led by Kamakshya Trivedi saw the yuan rallying to 6.5 per dollar by year-end versus its previous estimate of 6.9 on reopening optimism.
Lau's team said China is well-positioned across the growth, policy, and inflation cycles in a global context in 2023.
"The prevailing market backdrop leads us to believe that the downside risk of maintaining underweight or shorting Chinese stocks is meaningfully higher than going long."
Goldman has been bullish on Chinese equities as a growing chorus of Wall Street banks pins their hopes on a brighter 2023 for the country's battered shares.
The MSCI China Index has climbed 48% from an October trough, outperforming global peers over the last two months as the nation gradually emerged from stringent Covid restrictions and reopened its borders. Easing regulatory risks and support measures for the property sector lent an additional boost.
Separately, Alibaba expects further earnings upside for the nation's internet sector, given a faster-than-expected reopening, macro recovery, and normalizing regulations.
Goldman added Alibaba Group Holding Ltd BABA to its conviction list and reiterated buy ratings on several other technology firms.
Price Action: BABA shares traded higher by 4.95% at $112.72 premarket on the last check Monday.