China Weekly Kickstart Markets flat

Portfolio Strategy Research 18 September 2026 | 10:58PM HKT

Markets flat; HK unveiled its first FYP; Lower China GDP forecast on mixed activity data in August

MXCN/CSI300 were flat (-0.2%/-0.1%) this week. The FOMC Earnings and valuations (Pages 13-17) Kinger Lau, CFA | raised the funds rate by 25bp to 3.75-4.00%, the first hike Goldman Sachs (Asia) L.L.C. n MXCN/CSI300 12m forward P/Es are 10.1x/12.9x since July 2023. US Treasury Secretary Scott Bessent will Timothy Moe, CFA | meet Chinese Vice Premier He Lifeng in New York this n I/B/E/S consensus 2026/27E EPS growth is 17%/17% Goldman Sachs (Singapore) Pte

weekend. China’s Ministry of Commerce said on Thursday and 25%/17% for MXCN and CSI300, respectively Si Fu, Ph.D. | that China and US are maintaining close communication n Real Estate/Health Care were revised up the most Goldman Sachs (Asia) L.L.C.

regarding the issue of tariff reductions. The HK government off/onshore Kevin Wang, CFA | unveiled its first Five-Year Plan for Economic and Social Goldman Sachs (Asia) L.L.C.

Development. Southbound Connect saw US$1.5bn of inflows Flows (Pages 18) this week. August activity data were mixed, with IP beating n Southbound: US$53bn ytd at 5.2% yoy while FAI and retail sales missed, prompting our economists to cut their Q3 GDP forecast. August credit data Key reports came in below expectations, mainly on slow bank loan n China Musings: Policy and macro back to school extension and government bond issuance. SAFE data point to net FX inflows jumping to US$55bn. 70-city property Policies and news prices showed the primary market decline narrowing, with Tier-1 cities posting sequential gains. n Media reported that PBoC is planning new metrics to rein in banks’ long-dated bond holdings. Performance (Pages 8-12) Key charts: Market Update, Trump-Xi Meeting & n H: IT (4.6%) & Momentum (6.3%) outperformed, Energy Barometers (-3.5%) & Value (-5.4%) lagged n A: Real Estate (5.8%) & Size (3.7%) outperformed, Industrials (-3.1%) & DY + growth (-1.9%) lagged

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Goldman Sachs China Weekly Kickstart

Charts of the Week: Market Update

Exhibit 1: Market focus on AI has cooled somewhat in the past month Exhibit 2: China equities are relatively less correlated with oil prices

(k) Search index on AI Major indices correlation with oil price 10% 100 BBG news count 100 ytd past 2 years past 5 years 90 Google search interest - RHS 90 0% 80 Note: Google search interest is a score(0-100) on 80 -10% 70 the news search popularity. 70 60 60 -20% % 30 30 -40% % 0 0

Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Apr-26 Jul-26 -60%

-70% MXCN CSI300 SPX NASDAQ EU EM-ex-China

Source: Google, Bloomberg, Data compiled by Goldman Sachs Global Investment Research Source: FactSet, Goldman Sachs Global Investment Research

Exhibit 3: China rates have diverged from the global bond market Exhibit 4: ERP for A shares remains elevated

MXCN/China A ex-post ERP level (%) 10Y government bond yields 13% Implied MXCN ERP China Japan US EU 12% Implied China A ERP 9.2% 5.0 5.0 11% (0.4 s.d.) 4.0 4.0 10% 3.0 3.0 9% 2.0 2.0 8%

1.0 1.0 7% 6% 0.0 0.0 Note: ERP level implied from PC1 result of all 5 5% approaches (ex. X_sec), which was then rescaled -1.0 -1.0 according to the average of 5 approaches (Yield_gap, 5.7% Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 4% DDM, GGM, US_centric); numbers in brackets indicate (-1.1 s.d.) Jan-12 Jan-13 current level vs. all historical data Jan-14 3% Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 2004 Jan-23 Jan-24 Jan-25 Jan-

Source: FactSet, Goldman Sachs Global Investment Research For detailed methodology, please refer to Global Strategy Paper | China ERP: Your risks and expected returns of investing in China, 4 July 2023

Source: MSCI, FactSet, Wind, Goldman Sachs Global Investment Research