Goldman Sachs Group Inc.’s wealth-management business issues warning against investing in China

Goldman Sachs Group Inc.’s wealth-management business’s Chief Investment Officer, Sharmin Mossavar-Rahmani, has issued a clear cautionary note against investing in China, despite recent substantial declines in the country’s stock market.

In an interview with Bloomberg Television, Mossavar-Rahmani acknowledged the widespread perception of China’s apparent affordability but stressed, “Our view is that one should not invest in China.”

She cited various reasons for this position, expressing concerns about China’s economic trajectory over the next decade. Mossavar-Rahmani highlighted anticipated challenges in three key pillars of China’s growth: the property market, infrastructure, and exports.

Moreover, she underscored the lack of clarity in China’s policymaking, alongside inconsistent economic data, further fueling apprehensions about investing in the country.

The Goldman Sachs executive pointed out uncertainties in China’s policy direction, especially regarding information security measures and restrictions on data transfer out of the country.

Recent actions such as the suspension of some unemployment figures by the statistics bureau and the cessation of annual press briefings by China’s premier have contributed to the lack of clarity.

Mossavar-Rahmani emphasized, “It is not clear what the overall general direction of policy will be long term,” indicating that such policy uncertainties can limit the equity market.

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

Although it has rebounded following regulatory interventions, Mossavar-Rahmani remains skeptical.

She anticipates potential short-term stimulus measures but suggests that China’s real estate sector has yet to stabilize.

Expressing doubt about China’s official economic expansion figures, she highlighted the lack of transparency in economic data, echoing concerns shared by several economists.

Despite China’s formal announcement of a growth rate exceeding 5 percent 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, emphasizing that they do not recommend clients enter the Chinese market at this juncture.