Goldman Sachs CEO's latest statement! Gold, stocks, China's capital markets... what's the take?

“Goldman Sachs has been committed to the development of the Chinese market for the long term, and we remain steadfast in deepening our presence in China.” On January 28, Goldman Sachs Chairman and CEO David Solomon told Securities Times·Securities China reporters that he looks forward to further opening up China’s capital markets.

David Solomon arrived in Beijing recently, marking his return to China since November last year. During his work break, he exchanged views with multiple media outlets, including Securities Times. He stated that this visit to Beijing made him more clearly feel the further recovery and acceleration of Goldman Sachs’ business activities in China. He observed that global investors’ interest in China is rekindling. Additionally, he shared his perspectives on hot topics such as China’s economy, capital markets, gold, and US dollar assets.

Reaffirming Long-term Commitment to China Business Development

Since his first visit to China in the mid-1990s, Solomon has visited China almost every year, witnessing firsthand China’s tremendous growth from infrastructure development to technological innovation. He said that China’s rapid development makes him regard China as one of the most important and dynamic economies globally.

When asked about his latest views on China’s current economy, Solomon said that China has achieved its set growth targets, which is very positive. He affirmed China’s significant position in the global economy as a broad and diverse economic entity. He believes this is mainly due to technological innovation, manufacturing, and exports, while future growth engines will increasingly depend on consumption. Given China’s population size and economic scale, if consumption can be increased in the future, China’s economy will become more balanced and stable.

At the same time, he expressed his expectations for the development of China’s capital markets. Goldman Sachs has been in mainland China for over thirty years, currently engaging in various businesses including investment banking, fixed income, foreign exchange, commodities, stock trading, wealth management, and asset management.

Solomon stated that Goldman Sachs’ business in China is experiencing positive growth, especially in investment banking, with Hong Kong markets being particularly prominent. Benefiting from the accelerated recovery of the equity financing market, increased demand for financial advisory services, and the active and growing technology innovation companies, Goldman Sachs’ opportunities in investment banking are continuously increasing. Wealth management and other businesses are also steadily developing. He said that Goldman Sachs continues to focus on China’s economic scale, development sectors, and directions, and will persist in its long-term development in China.

He reaffirmed Goldman Sachs’ long-term commitment to the Chinese market, was encouraged by China’s ongoing opening-up measures, and looks forward to further opening-up space, especially in asset management, wealth management, and other broader business areas, to gain more business opportunities. In his view, this will help attract more talent and capital, and as openness increases, it will further promote market development.

Stocks Outperform Gold in the Long Term

During a 40-minute discussion, views on various assets were among the key topics. In early January, Goldman Sachs’ research team released a report recommending a strong overweight position in A-shares and Hong Kong stocks within the Asia-Pacific region until 2026. When asked about the stock market again, Solomon said he does not study individual markets, but from a valuation perspective, Chinese stocks had a significant advantage a year ago, depending on specific growth and profit models, and remain attractive now. He also admitted that it is currently difficult to predict short-term trends.

However, he noted that international capital is flowing back into China, which can be seen from the rise in Chinese stock markets. Solomon believes that by 2026, the marginal inflow of international capital into Chinese assets will continue, and global investors are also looking forward to a more balanced and open Chinese economy, which will attract more funds to Chinese assets.

Regarding the currently popular gold, he frankly stated that it is not his long-term favored asset class. “In the long run, stocks consistently outperform gold.” In Solomon’s view, the recent increase in central banks’ gold holdings is to adjust their dollar asset exposure, creating short-term trading opportunities. However, for investment cycles spanning decades, holding stocks is better than gold.

Regarding recent market concerns about the “sell-off of US Treasuries” and the weakening US dollar, Solomon believes that the way global investors allocate capital has not fundamentally changed. Due to “short-term noise” such as geopolitical conflicts, traders and investors may make slight adjustments to their allocations to hedge risks, leading to a weaker dollar. But these fluctuations are more short-term, and the dollar, as the world’s primary reserve currency, will not undergo substantial change.

Solomon believes that in the current market environment, the key is to distinguish between noise and substantive issues. He frankly stated that although global uncertainties have increased compared to the past, the extent “is not that high.”

The Driving Force Behind This Round of AI Investment Is Different from the Past

Regarding the heated debate on whether there is a bubble in the AI sector, he also shared his views. He affirmed the long-term development potential of AI and said it will have a profound impact on the productivity of global enterprises and the entire economy.

He admitted that in the early stages of new technology development, large amounts of capital tend to be attracted, and investors are eager to participate, which may create an atmosphere leading to excessive optimism about technological applications and demand growth.

He compared the current stage to the early development of the internet, pointing out that during the internet expansion in 1996, there was also discussion of a bubble, but the stock market still rose sharply in the following years. He frankly said, “It’s hard to judge which stage of this cycle we are in,” but when a technology accelerates development, the market will eventually undergo a “re-adjustment,” at which point real demand will become clearer, and winners and losers will emerge in the industry.

He emphasized that the current AI investment is driven by different factors than in the past: “Much of the invested capital comes from highly profitable companies, not just speculation. They see the demand within their own businesses.”