Daijiworld Media Network - Mumbai

Mumbai, Apr 14: Global investment giant Goldman Sachs has lowered its 12-month targets for key Chinese stock indexes for the second time this month, citing rapidly intensifying trade tensions between the United States and China. The downgrade comes amid growing investor concerns over a deepening rift between the world’s two largest economies.

In a note released Monday, a team led by Goldman Sachs chief China equity strategist Kinger Lau warned that US-China trade tensions have reached “unprecedented levels,” raising fears of a global economic slowdown and decoupling in critical sectors like capital markets, technology, and geopolitics.

As per the revised forecast, Goldman now sees the MSCI China Index reaching 75 in the next 12 months, down from a previous target of 81. The CSI 300 Index, which tracks mainland Chinese stocks, was also downgraded to 4,300 from 4,500. Despite the cuts, the bank still sees potential gains of 12% and 15%, respectively, from last Friday’s close.

The ongoing tit-for-tat tariff battle between Washington and Beijing has weighed heavily on Chinese equities in recent weeks. Beijing recently slapped retaliatory tariffs of up to 125% on US goods after President Donald Trump imposed 145% tariffs on Chinese imports a sharp escalation in the trade war that has rattled global markets and dampened investor sentiment.

However, markets found brief relief on Monday after the US government announced a temporary pause on tariffs targeting smartphones, computers, and other consumer electronics. Following the announcement, the MSCI China Index climbed as much as 2.5%, while the CSI 300 Index saw a more modest gain of 0.7%.

Goldman Sachs had remained relatively bullish on Chinese equities earlier this year. In February, the bank raised its MSCI China target to 85, buoyed by optimism around emerging AI firms such as DeepSeek. But the index has since dropped over 8%, pressured by mounting trade threats and increasing geopolitical risk.

This marks the second target revision in April alone — Goldman had already lowered its MSCI China forecast from 85 to 81 on April 6, following the implementation of Trump’s new tariff package on April 2.

With both countries digging in their heels and signs of further escalation, Goldman’s latest move underscores the fragile outlook for Chinese equities and the broader implications of deteriorating US-China relations.