Goldman Sachs has adopted a more optimistic stance on Chinese equities, increasing price targets on domestic indexes and launching a 40-stock China Recovery Portfolio. Kinger Lau, CFA, and his team at Goldman Sachs see a “tail-risk compression trade” in progress, following a substantial rally in Chinese stocks. The MSCI China Index, as tracked by the iShares MSCI China ETF (NYSE:MCHI), has risen 31% from its lows in late January and 19% in the past month, outperforming most developed and emerging market equity indices. According to Goldman Sachs’ historical analysis, there’s a 60% probability that Chinese stocks will continue to rise after entering a technical bull market, with potential maximum returns averaging 35% over the next six months. Chart: Chinese Stocks Sharply Rebounded Recently China At An Inflection Point? Recent weeks have seen a reduction in property-related risks, and Goldman Sachs noted that China’s macroeconomic performance has exceeded ...