Fresh economic data from China has raised new concerns about growth momentum, with major global banks turning more cautious on both the economy and equity markets.
Goldman Sachs Flags Downside Risk to China’s Q4 Growth
Goldman Sachs said China’s November activity data came in weaker than expected across key indicators, including industrial production, retail sales, and fixed asset investment.
Retail sales growth slowed to just 1.3% year-on-year, while investment momentum continued to weaken as China moves deeper into the fourth quarter. As a result, Goldman Sachs warned of downside risks to its current 4.5% GDP growth forecast for Q4.
The bank noted that China’s fiscal stance remains conservative heading into 2025. However, revised government deficit projections suggest a stronger fiscal push could arrive in 2026. Until then, markets are closely watching whether policymakers introduce near-term stimulus to support growth from late Q4 into early Q1.
Citi Downgrades China Equities to Neutral
Adding to the cautious tone, Citigroup has downgraded its view on China equities to Neutral from Overweight.
Citi cited a weak macroeconomic outlook and softer earnings revisions as key reasons for the downgrade. This move reverses the bank’s more optimistic stance from July, signaling growing concern about China’s near-term growth trajectory.
The bank’s strategists said they now prefer markets with stronger exposure to the global AI supply chain, where earnings visibility and growth prospects appear more resilient.
Why This Matters for Markets
Despite these downgrades, many global banks remain broadly constructive on China, making Citi’s move stand out. Together with Goldman Sachs’ warnings, the developments highlight rising uncertainty around China’s recovery path.
Investors are now focused on one key question: Will Beijing deliver timely policy support to stabilize growth in the coming months? The answer could shape market sentiment as 2026 approaches.
