China stocks slide, but global investment banks stay upbeat on outlook

China's major stock indexes closed lower on Thursday, with all three benchmarks retreating. The Shanghai Composite Index fell 1.25 percent to 3,765.88, the Shenzhen Component Index dropped 2.83 percent to 12,118.70, and the ChiNext Index, which tracks growth-oriented companies on China's Nasdaq-style board, plunged 4.25 percent to 2,776.25.

Sector-wise, retail, personal care, and food and beverages led the gains, while semiconductors, telecom equipment, and electronic chemicals were among the biggest decliners.

Liang Chengwei, investment advisor at Minmetals Securities, said the market correction was largely expected given the surge in trading turnover and the Shanghai Composite's elevated levels.

Despite the market correction, the global investment bank Goldman Sachs remains upbeat. Kevin Sneader, president of Asia-Pacific Ex-Japan at Goldman Sachs, said on Wednesday that sentiment toward Chinese equities is improving among clients and investors.

He noted the latest rebound in Chinese stocks has a solid foundation, with hedge fund inflows picking up even as long-term investors await clearer policy signals. A major driver of the rally, Sneader added, remains China's household investors, who hold vast amounts of savings.

As of the end of July, China's household deposits stood at 160.9 trillion yuan ($22.5 trillion). JP Morgan recently forecast that about 2.5 trillion yuan of savings could flow into the A-share market between July 2025 and the end of next year, potentially lifting stock prices by more than 20 percent.

jiangxueqing@chinadaily.com.cn