Goldman Sachs The 720: Policy easing, AI chain, and selected stock opportunities coexist, while macro conflict and valuation pressure constrain short-term risk appetite
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Goldman Sachs The 720: Policy easing, AI chain, and selected stock opportunities coexist, while macro conflict and valuation pressure constrain short-term risk appetite
This issue covers China macro, global inflation and rates, AI-related supply chains, consumer, materials, fintech, and commodities, with an overall constructive view but emphasis on significant divergence in asset performance.
- China's Q2 real GDP annualized qoq growth slowed to 3.6%. Goldman expects the July Politburo meeting to send a stronger easing signal and anticipates faster deployment of RMB800bn in policy financial tools and the remaining government bond quota.
- On global macro, risks of Middle East escalation coexist with improving inflation in the US and other regions; Goldman believes the inflation improvement will ultimately prevail, pushing policy rates in most major economies below market pricing.
- The AI-related chain remains a core theme: Mitsui Kinzoku in high-end copper foil, Eoptolink in 800G/1.6T optical modules, China's data center electrical equipment, and the copper demand narrative all benefit, although high valuations may weigh on short-term market performance.
- At the stock level, Buy views are concentrated in Kweichow Moutai, Mitsui Kinzoku, Kstar, Samsung Biologics, CR Mixc Lifestyle, HYBE, Jindal Stainless, Eoptolink, One 97 Communications, and Ultratech Cement.
- Risks are concentrated in escalating Middle East conflict, weak domestic demand, cost and FX pressure, intensifying competition, valuation pullbacks, and commercialization in some industries falling short of expectations.
Report interpretation
Overview
This is Goldman Sachs Global Investment Research's The 720 multi-theme research brief. The main threads include expectations for China macro policy easing, views on global inflation and rates, AI supply-chain demand, selected stocks in Asia and India, Australian gold M&A, humanoid robot commercialization, and copper market supply and demand. Rather than a deep dive on a single company, the report compiles macro, industry, and stock updates into daily investment leads.
Core views
The core views are: first, slower China economic growth increases the need for policy easing, and faster fiscal deployment could support the full-year real GDP growth forecast of 4.6%; second, improving global inflation may ultimately outweigh the impact of Middle East escalation, putting major economy rate paths below market pricing; third, AI capex continues to support demand for high-end copper foil, optical modules, data center electricals, and grid/copper demand, but high valuations will bring short-term volatility; fourth, at the equity level, investors should favor companies with pricing power, capacity expansion, product upgrades, market share gains, or structural demand support.
Analysis framework
The report combines macro scenario assessment, pre-policy-meeting outlooks, company earnings forecast revisions, target price adjustments, industry supply-demand tracking, peer valuation resets, M&A scenario analysis, and result commentary. For individual stocks, it mainly focuses on 12-month target prices, changes in earnings forecasts, order or demand trends, cost pressure, competitive landscape, and catalysts.
Methodology notes
Use economic growth, fiscal impulse, geopolitical risk, and inflation breadth to assess policy paths and asset impacts.
In China macro, Q2 real GDP slowdown, the pace of fiscal deployment, and Politburo meeting language are used as the basis for the easing view; in global macro, the relative impact of Middle East escalation risk versus improving inflation on rates and risk assets is compared.
Adjust EPS, EBITDA, net profit forecasts, and 12-month target prices based on fundamental changes.
The report raises target prices or earnings forecasts for companies such as Moutai, Eoptolink, One 97 Communications, and Ultratech Cement, while cutting some forecasts or target prices for Kehua, HYBE, and JYP due to costs, competition, or changes in growth expectations.
Compare stocks with the market and industry peers across four attributes: Growth, Financial Returns, Multiple, and Integrated.
The disclosure section explains that Growth is based on forward sales, EBITDA, and EPS growth; Financial Returns are based on ROE, ROCE, and CROCI; Multiple uses valuation metrics such as P/E, P/B, and EV/EBITDA; Integrated combines growth, returns, and valuation percentiles.
Use a 1-to-3 probability score to assess the likelihood that a company becomes an acquisition target.
M&A Rank 1 represents high probability, 2 medium probability, and 3 low probability; for Rank 1 or 2 companies, Goldman may incorporate an M&A component into the target price.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- China macro and China risk assetsExpectations for policy easing are the main positive driver.
- Strengths
- RMB800bn of policy financial tools and the remaining government bond quota are available; if deployed faster, they could help support full-year growth.
- Weaknesses
- Q2 real GDP growth slowed, domestic demand is weaker than high-tech exports, and local implementation constraints remain.
- Comparison
- Compared with external demand and high-tech exports, domestic demand recovery remains more fragile.
- Risks
- Complacency at the central level due to base effects, constrained local execution, and policy implementation slower than expected.
- Kweichow MoutaiFeitian price increases strengthen pricing power and profit expectations.
- Strengths
- The second round of price increases demonstrates brand pricing power, while retail demand resilience and wholesale price trends remain stable.
- Weaknesses
- Earnings growth still depends on high-end baijiu demand and channel confidence.
- Comparison
- It has stronger brand strength and pricing power than peers in the consumer sector.
- Risks
- Weak macro consumption, wholesale price declines, and softer-than-expected festival demand.
- Mitsui KinzokuDemand for high-end copper foil in AI server PCBs is the core driver.
- Strengths
- It maintains about 80% global share in the top HVLP4 and above segment, with clear advantages in technology and customer relationships.
- Weaknesses
- The stock had previously corrected sharply on competition concerns, and the market is sensitive to the competitive landscape.
- Comparison
- Relative to competitors in Taiwan and mainland China, Goldman believes its high-end advantage remains intact.
- Risks
- Intensifying competition, slower-than-expected capacity expansion, and a slowdown in AI server demand.
- China data center electrical equipmentOverseas UPS demand, 800VDC commercialization, and domestic cloud capex will determine 2H26 performance.
- Strengths
- Kstar benefits from overseas UPS and 800VDC commercialization; Megmeet has momentum in server power supplies.
- Weaknesses
- Domestic energy storage cost pressure, rising SG&A, and FX and raw-material inflation weigh on profitability.
- Comparison
- Kstar offers better risk-reward than Kehua and Megmeet; Kehua and Megmeet remain Neutral.
- Risks
- Local pricing pressure, weaker-than-expected overseas expansion, and headwinds from raw materials and FX.
- Samsung BiologicsThe PolyPeptide acquisition accelerates its multimodality CDMO buildout.
- Strengths
- Adds a peptide therapeutics CDMO platform, creating synergies with its existing biologics and ADC platforms.
- Weaknesses
- PolyPeptide FY2026 EBITDA is about 5% of Samsung Biologics forecasts, implying limited short-term profit contribution.
- Comparison
- The deal increases its direct exposure to the fast-growing peptide market.
- Risks
- Integration, tender completion, synergy realization, and CDMO demand volatility.
- Korea EntertainmentThe valuation framework is being reset toward global music peers, increasing stock differentiation.
- Strengths
- HYBE's non-BTS revenue base is expanding, with strong momentum from new IP such as CORTIS and KATSEYE.
- Weaknesses
- JYP earnings are concentrated in mature Stray Kids and TWICE IP, with growth expectations revised down.
- Comparison
- HYBE remains Buy, while JYP is downgraded to Neutral.
- Risks
- Rising labor costs, slow ramp-up of new IP, maturation of the fan economy, and valuation compression.
- Jindal StainlessStructural growth in Indian stainless steel consumption supports initiation at Buy.
- Strengths
- Around 8% structural demand growth in India, 4mtpa expansion, a solid balance sheet, and a higher mix of value-added cold-rolled products.
- Weaknesses
- The expansion phase still requires capital investment.
- Comparison
- Goldman believes it is best positioned to capture Indian stainless steel demand growth.
- Risks
- Project execution, steel price and raw-material volatility, and weaker-than-expected demand.
- EoptolinkVolume ramp in 800G/1.6T optical modules and AI capex drive earnings upgrades.
- Strengths
- 2Q26 net profit guidance midpoint is 44% above expectations, with an upgraded high-speed optical module product mix.
- Weaknesses
- It still depends on optical chip supply and capacity expansion.
- Comparison
- It has relatively clear earnings catalysts within the AI optical module chain.
- Risks
- Slower AI capex, supply constraints, and price competition.
- One 97 CommunicationsPayment share gains, merchant loan distribution, and cost control drive valuation upgrades.
- Strengths
- 1QFY27 revenue grew 28% yoy, EBITDA beat expectations by 20%, and EBITDA margin reached 8.3%.
- Weaknesses
- Regulatory and licensing factors still affect business expansion.
- Comparison
- Within fintech, it benefits from rising offline and online payment share.
- Risks
- Changes in UPI regulation, slower-than-expected progress on the wallet license, and slower loan distribution.
- CopperTension between tight spot conditions and macro weakness, while the AI power-demand narrative raises medium- to long-term attention.
- Strengths
- China visible refined copper inventories fell to 167kt, with seasonal lows indicating tight supply and demand.
- Weaknesses
- The macro backdrop is not as strong as spot fundamentals, and prices are sensitive to rates and geopolitical conflict.
- Comparison
- Spot fundamentals are stronger than the macro trading environment.
- Risks
- Escalation in the Middle East could lift inflation and rate-hike concerns, weighing on copper prices.
Key data
- China Q2 real GDP growth3.6% qoq annualizedGrowth slowed significantly, increasing downside risk to the full-year 4.5%-5% target.
- Goldman Sachs China full-year real GDP forecast4.6%The report argues that faster fiscal deployment is needed to achieve this forecast.
- Unused policy financial toolsRMB800bnSeen as one of the existing fiscal resources that can be deployed faster.
- Kweichow Moutai target priceRmb1,667The 12-month target price was raised due to the second round of Feitian price increases and pricing power.
- Mitsui Kinzoku target price¥62,600Buy, mainly based on its share in high-end HVLP4 and above copper foil and expanding MicroThin demand.
- Mitsui Kinzoku high-end copper foil shareapproximately 80%Refers to its global share in the top HVLP4 and above segment.
- Kstar target priceRmb67Buy maintained, positive on overseas UPS demand and 800VDC commercialization.
- Kehua target priceRmb35Neutral maintained, with target price cut and 2026-2030E net profit reduced by 5%.
- Samsung Biologics acquisition amountCHF1.46bnProposed all-cash tender offer to acquire 100% of PolyPeptide.
- Samsung Biologics target priceW2,000,000Buy, with the acquisition seen as accelerating multimodality CDMO expansion.
- CR Mixc Lifestyle target priceHK$52Buy, with expected double-digit profit growth in 1H26 and a 100% payout outlook intact.
- HYBE target priceW300,000Buy maintained, but target price cut due to valuation framework reset and cost factors.
- JYP target priceW51,000Downgraded to Neutral because earnings remain concentrated in more mature IP and growth expectations are more moderate.
- Jindal Stainless target priceINR1,000Initiated at Buy, benefiting from about 8% structural demand growth in Indian stainless steel.
- Jindal Stainless expansion plan4mtpaThe Maharashtra greenfield expansion is expected to double capacity.
- Eoptolink target priceRmb633Buy, with 2Q26 net profit guidance midpoint 44% above Goldman expectations.
- One 97 Communications target priceRs1,500Buy, with 1QFY27 revenue up 28% yoy and EBITDA 20% above Goldman expectations.
- Ultratech Cement target priceRs13,500Buy, with strong 1QFY27 results and volume growth of 13% yoy.
- US core PCE high-inflation breadthweighted 6, unweighted 2Measured on a scale where 0 is the historical mean and 10 is the 2022 pandemic peak.
- China visible refined copper inventories167ktAt the bottom of the seasonal range, indicating a tight spot market.
Impact & implications
The investment implication is that, at the macro level, lower rates or rates below market pricing are supportive for risk-asset valuations, but geopolitical conflict and elevated AI valuations will limit short-term upside; for China assets, investors need to watch the strength of policy execution rather than easing rhetoric alone; at the equity level, attention can focus on AI-chain names with clear fundamental catalysts, consumer companies with pricing power, India structural-demand beneficiaries, and fintech names with improving profitability, while avoiding areas facing intensifying competition, rising costs, or overly early-stage commercialization.
Risks
- Escalation of Middle East conflict could push up inflation and rate expectations, weighing on bond and equity market performance.
- AI-related stocks have high valuations; if flows reverse or earnings delivery slows, the market may struggle to rise in the short term.
- China domestic demand remains weak; if fiscal deployment and local execution are slower than expected, the full-year growth target faces downside risk.
- AI-chain areas such as data center electrical equipment, copper foil, and optical modules may face intensifying competition, raw-material costs, and supply bottlenecks.
- Commercialization or earnings growth in K-pop, robotics, and some consumer segments may fall short of market expectations.
- Regulatory, licensing, and policy changes may affect fintech and cross-border research coverage assets.
What to watch
- Whether the July China Politburo meeting delivers stronger easing language and the subsequent pace of actual fiscal deployment.
- Whether US core PCE high-inflation breadth declines in the fourth quarter as expected.
- Whether the Middle East situation escalates and pushes energy, inflation, and rate risks higher again.
- Whether AI capex, 800G/1.6T optical module shipments, the transition to 1.6T optical transceivers, and high-end copper foil supply-demand continue to improve.
- The trend in Moutai Feitian wholesale prices and channel feedback around the Mid-Autumn Festival.
- Progress on Samsung Biologics' acquisition of PolyPeptide, the integration path, and FY2027 consolidation impact.
- The divergence between HYBE's new IP ramp-up and slowing growth in JYP's mature IP.
- Commercialization progress of humanoid robots in logistics and structured industrial scenarios in China, and whether the dexterous-hand supply chain begins to face commoditization pressure.
- The impact of copper inventories, scrap copper circulation, US import demand, and tariff expectations on ex-US copper market tightness.