Goldman Sachs cuts Hong Kong stocks in favor of mainland China AI hardware plays Goldman Sachs has shifted its preference from Hong Kong-listed H shares to mainland China’s A shares, particularly for artificial intelligence hardware investments. The investment bank has raised its target for the CSI 300 index, citing strong growth potential in mainland AI companies, while noting the underperformance of Hong Kong’s tech sector. This divergence is attributed to Beijing’s focus on AI hardware development, which has driven substantial market gains and earnings growth for “hard tech” stocks.

• Goldman Sachs now prefers mainland Chinese stocks (A shares) over Hong Kong stocks (H shares).
• The preference is driven by opportunities in artificial intelligence hardware companies, which are largely traded on the mainland exchange.
• Goldman Sachs raised its 12-month target for the CSI 300 index to 5,500, indicating nearly 12% potential upside.
• The MSCI China index (heavy in H shares) has seen its potential gains lowered, despite still offering an 11% upside.
• Year-to-date, the CSI 300 has gained over 6%, while the Hang Seng Index is up about 1.5%.
• The Hang Seng Tech index has fallen over 5.5%, while the ChiNext has surged over 25%.
• Beijing’s AI policy emphasizes hardware development, leading to strong performance in “hard tech” stocks.
• Chinese AI stocks are considered substantially under-owned by international investors.
• Upcoming IPOs for chip and robot companies are expected on the mainland, not Hong Kong.