China's A-shares become more investable for global investors, Goldman Sachs

Photo taken on Nov. 14, 2021 shows the exterior view of the office building of the Beijing Stock Exchange, in Beijing, capital of China. (Xinhua/Li Xin)

China's A-share market has become more investable for global investors, reported Securities Daily quoting a research report released on Monday by a strategy analysis team of the global-leading investment bank Goldman Sachs.

The continuous reform and opening-up of China's capital market, the broadening of investment channels, the richness of products and the evolution of market structure all contribute to this trend, points out the report.

China's A-share market is worth 14 trillion U.S. dollars, with an average daily trading volume of 188 billion U.S. dollars, ranking second globally in both size and trading activity. The market is of great significance to global investors for great growth potential.

In the past few years, China has conducted multiple regulatory adjustments to improve efficiency, governance framework, information asymmetry and investor protection of the A-share market, and to better meet related international standards.

With the establishment of the Science and Technology Innovation Board and the Beijing Stock Exchange, important macro policies have been implemented successively, including supporting small- and medium-sized enterprises and direct financing, deleveraging, cultivating innovation and promoting fair competition.

The report believes that the new listing mechanism and exchange can help facilitate the involvement of fast-growing enterprises in the capital market and further optimize the fundamentals of A-shares.

The A-share market remains profitable for investors looking for structural or endogenous growth opportunities, and according to the classification by the strategy analysis team of Goldman Sachs, Chinese enterprises account for about 40 percent of the global enterprises with high growth prospects, says the report.

The report also identifies environment, society and governance (ESG) as the most significant action initiative and investment theme globally, and notes that Goldman Sachs expects China's green capital expenditure to reach 16 trillion U.S. dollars in the next 40 years.

The strategy analysis team of Goldman Sachs believes that common prosperity, which is related to the ESG, will be the guiding principle for China's future development, and according to calculation, 68 percent of the market value of the A-shares is related to this comprehensive development concept, says the report.