(Yicai) May 16 -- Foreign financial institutions, including Goldman Sachs Group and Nomura Group, have raised their outlooks on Chinese stocks following recent US tariff adjustments and fresh policy stimulus in China.

Goldman Sachs yesterday hiked its 12-month targets for the MSCI China Index and the CSI 300 Index to 84 from 78, and to 4,600 from 4,400, respectively, while maintaining its overweight rating on Chinese equities -- a clear buy signal with double-digit growth potential.

Trade tensions between China and the US have temporarily eased, the American investment bank noted. In this context, Goldman has raised its economic growth forecasts for both countries, lowered the probability of a US recession, delayed its forecast for Federal Reserve interest rate cuts, and adjusted its expectations for further easing measures in China.

This marks the second upgrade in a week by the financial behemoth. On May 8, the New York-based firm reaffirmed its overweight stance and raised its 12-month targets for the MSCI China Index to 78 (from 75) and for the CSI 300 Index to 4,400 (from 4,300).

Last week, the People’s Bank of China, the China Securities Regulatory Commission, and the National Financial Regulatory Administration jointly rolled out a series of financial support measures, including interest rate cuts and a relaxation in the reserve requirement ratio.

Goldman Sachs said these targeted, demand-side policies aim to stabilize the real estate sector, support small and medium-sized enterprises, boost shareholder returns, and foster a more stable and healthy equity market.

Moreover, Japanese investment bank Nomura upgraded its rating on Chinese stocks to "tactical overweight" from "neutral" on May 13, signaling a short- to medium-term bullish outlook. Nomura noted that the recent temporary tariff reduction agreement between China and the US was an unexpected move that could boost market sentiment in the near term. The rebound in Chinese equities over the past month is likely to continue, it added.

Other major foreign institutions have echoed this optimistic outlook. Zurich-headquartered UBS and Atlanta-based Invesco have both expressed confidence in China's market prospects.

"Significant tariff cuts between China and the US could help China’s capital markets regain upward momentum," said Meng Lei, China equity strategist at UBS Securities.

Given the low starting point and new rounds of supportive policy, earnings for mainland-listed companies are expected to recover quarter-on-quarter this year, Meng said. In terms of valuations, clearer fiscal policy direction, increased market liberalization, and strong backing for the private sector may help compress the equity risk premium, he added.

Zhao Yaoting, global market strategist for Invesco Asia-Pacific (ex-Japan), said that the recent tariff easing, normalized trade policy, and the Donald Trump administration’s focus on tax cuts could help return the market to levels seen before this year.

Editor: Emmi Laine