GS Quek Weekend Thoughts Chinas Go Global Indias AI Enablers

GS Quek - Weekend Thoughts Chinas Go Global Indias AI Enablers 19 Sep 2026 Benny Quek · Goldman Sachs · Managing Director, Global Banking & Markets FICC & Equities Sat 19 Sep 2026, 4:48am EDT

38/53. China's Go Global, India's AI Enablers. Past notes: 37/53. Fed/ECB hikes, Equities playbook, ALC/Communacopia takeaways – remain bullish AI. 34

38/53. China's Go Global, India's AI Enablers.

37/53. Fed/ECB hikes, Equities playbook, ALC/Communacopia takeaways – remain bullish AI.

34/53. Momentum rotation, Gold encore, Bitcoin.

Couple of quick charts for the week.

This week’s HF flows saw DM buying funded by Asia selling. US saw largest net buying in 5 weeks, led by Tech – I have earlier flagged that US Tech positioning looked light (relative to Asia). What caught my eye was that European equities were net bought by the fastest pace in 5 months, driven by short covers. From sector lens this was concentrated in Industrials, Tech, and Discretionary. Net allocations still stand near 5-year trough levels.

Speaking of US Tech recovery. Over the past month saw strong inflows into Mag-7. Net allocation are now back to near peak levels.

Software recovery remains on track. It was the most net bought sub-sector over the past month.

Good recap of global views from Peter Oppenheimer: Competition for Capital amidst AI boom, rising yields and equity risk premia compression. Still striking a constructive medium-term tone. Tech profits remain strong, interest coverage ratios are undistracting, and demand for compute continues to outstrip supply – diminishing the likelihood that we are in an earnings bubble.

Speaking of earnings. SPX EPS grew by 50% YoY in 2Q and 26% on a 4-quarter trailing basis. There are some signs of ‘over-earning’ but would stop short of calling it a ‘bubble’. Neither do we see earnings falling off a cliff. GS base case still calls for SPX EPS growth of 11% in both 2027 (to $415) and 2028 ($460), underpinned by solid macro vs fading AI tailwind.

MTD Asia HF flows. Continue to see rotation from Korea/Taiwan/Japan to HK/China. Likewise if we look across active AEJ LO funds, China (and India) saw the largest jump in August positioning data. Sunil Koul’s weekly fund flows note has all the data and charts.

China’s Go Global. This is not a new theme. But I thought this is an excellent piece with a mark-to- market, and frame the forward path over the next decade. This note stitched together insights from 36 GS global analysts across 11 sectors and 40 global companies. Looking back the biggest share gains so far have been in EM (not US which is perceived as most contested) and B2C consumer products (not industrial products). While Chinese exports typically enter at an average 30% discount, prices subsequently rose in 7 of 11 sectors post-entry. Forward path will be ‘harder and slower’ but we see aggregate ex-China share will jump from 18% to 31% by 2035. This upside remains largely unpriced especially with what we call the ‘Latecomers’ (Robotaxis, surgical robots, e-commerce, clear aligners, transformers). More philosophically as China continues to export deflation (and quality) I do wonder how we should think about structural margins/ROE outlook for many of these DM companies, and subsequently the headline DM P/E one should be paying. Views?

This piece on Friday got me pumped up early in the morning. India has been a key laggard as the perfect ‘anti-AI’ trade. Well, not entirely. In this new note dug out a list of 42 names (see last page of report) most leveraged to the domestic AI ecosystem. These SMID cap plays sit in segments across power equipment/generation, data center hardware/operation, semis OSATs/materials etc. Collectively the group is up +60% YTD versus NIFTY -11%. More notably these 42 names will account for ~40% of NIFTY 500’s entire capex growth this year. I do wonder if this could drive a broader capex story for India. Push back has been valuations and light AI exposure for some names, but nonetheless I still think it is worth doing some work. Broad interest In India remains low but as flagged in last week’s note FII fund flows have quietly turned positive in 2Q, Jul and Aug. Speak to India strategist Amorita Goel?

Am travelling…