Goldman Sachs Eats Humble Pie Over China Error

When it comes to bad calls, one of the biggest and perhaps most common this year was the assumption that, after China's catastrophic lifting of COVID-19 restrictions last December—a move which led to an estimated 1.9 million deaths—the reopening boom sure to follow would quickly lift the nation's economic fortunes, David E. Rovella wrote for Bloomberg's Evening Briefing.

Echoing the forecasts of Goldman Sachs, some strategists even predicted a 15% rally in the Chinese stock market, and that a bounce in the world's second-largest economy would lift all boats. I Photo: 2211473abhijithsaravanan Wikimedia Commons

At the start of 2023, Goldman Sachs was among the chorus of Wall Street banks predicting a bright new year, in part because of this expected recovery.

Some strategists even predicted a 15% rally in the Chinese stock market, and that a bounce in the world's second-largest economy would lift all boats, helping emerging markets make it a banner year, too.

Instead, what happened was Chinese stocks moved 15% in the other direction, while many emerging markets did just fine anyway.

According to Goldman's Kamakshya Trivedi, the bank's head of global currency, rates, and emerging-markets strategy, this curious result that few saw coming could be seen as a warning to eager-beavers not to trust an opaque market and not to plunge headlong into the precipice.

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