Goldman Sachs, which started the year upbeat on the outlook for Chinese stocks, significantly slashed its target for the country’s equities late Tuesday, citing deleveraging in the economy and the risk of hot money outflows in the coming months.
The U.S. investment bank, which sees “no rainbow” ahead for mainland equities, cut its 2013 target for the China Security Index (CS1) 300 by 15 percent to 2,380 from 2,800. The new target represents 8 percent upside over the next six months.
The bank also downgraded its earnings outlook for components on the CSI 300 to earnings per share (EPS) growth of 6 percent from an initial estimate of 10 percent. The CSI 300, which is designed to mirror the performance of stocks traded on the Shanghai and Shenzhen stock exchanges, has a heavy weighting of financial stocks.
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