Goldman Sachs Poll Reveals Chinese Investors’ Worries About Trump’s Election Win
On top of tumbling stocks, an embattled property market, and a struggling economy, a potential win by former US president Donald Trump in the November general election seems to keep domestic Chinese investors up at night.
According to Bloomberg News on the 4th (local time), Goldman Sachs Group Inc. announced the finding after talking with its onshore clients — which include mutual funds, private equity funds, and asset managers at insurance firms — in Beijing and Shanghai over the past week.
Goldman Sachs economists conveyed through an investment note that “the most frequently asked questions among local investors include implications for China should Donald Trump become the next US president.”
Their concerns didn’t come of nowhere. The Washington Post (WP) reported on Jan 27th that Trump is weighing options for a major new economic attack on China if reelected.
Former President Trump has endorsed revoking China’s “most favored nation” status for US trade, which could lead to federal tariffs on Chinese imports of more than 40%, according to the Post.
Moreover, it was reported that former President Trump has discussed with advisers the possibility of imposing a flat 60% tariff on all Chinese imports. In an interview with Fox News that day, he said, “Maybe it’s going to be more than that.”
However, David Firestein, president of the George W. Bush China-U.S. Relations Foundation, doesn’t expect the US election to impact ties between the two countries significantly.
“Whoever wins the 2024 presidential election, whether that’s Biden or Trump, I don’t think there’ll be a difference in the way the US approaches China — whether it’s US investment, technology transfer or trade,” he said. When Biden came in, he essentially not only embraced Trump’s policies but indeed largely doubled down on them,” he explained.
At the same time, he said he can see why China would be pleased if former President Trump wins. As for Trump implementing new tariffs, “how seriously to take Trump’s proposal is a question mark.”
Meanwhile, local investors looking forward to China’s economic prospects for 2024 didn’t offer much solace.
When asked by Goldman to rate their outlook for the year using a scale from zero to 10 — where zero was equal to the problematic 2022 Covid lockdown period and 10 to the first quarter of 2023 when China reopened and the last positive quarter for its equities market — half of the 12 local investors who answered said zero. The rest of the investors gave an average score of 3.
According to Goldman Sachs, local Chinese investors also wanted to learn what would trigger more aggressive policy easing in Beijing and offshore investors’ views about Chinese stocks after the persistent selloff.
On the other hand, foreign investors were focused on economic fundamentals, including whether the property market has bottomed and how policymakers can fight deflation, Goldman Sachs added.
Meanwhile, the Chinese CSI 300 index ended the period down 4.6%, its most significant drop since 2022, while the Shanghai Composite Index lost 6.2% in its worst week since 2018.