Goldman Sachs market research indicates that as the traditional "eventful autumn" approaches, global institutional investors are showing significant divergence in market sentiment. The bull camp continues to chase the AI-driven tech stock rally, while the bear camp is increasingly wary of economic growth slowdown and market concentration risks. Amid this divergence, a strong consensus has emerged: whether bullish or bearish, going long on gold has become a common choice for all. Meanwhile, attention on the Chinese market remains high, with 62% of respondents planning to maintain or increase their allocation to Chinese stocks.
The main contents of the report are as follows:
Bull-Bear Divergence: AI Faith Coexists with Growth Concerns
The survey of 804 institutional investors shows that although overall risk sentiment has improved compared to last month and recession fears have further receded, two major camps have formed within the market. The bull camp remains optimistic about the future performance of US stocks, particularly the "Magnificent Seven" tech giants, believing the AI narrative is far from over. More than half of the respondents stated they plan to maintain or increase their long positions in the "Magnificent Seven." However, new capital inflows into this trade are showing a slight decline, indicating subtle changes beneath the surface. On the other hand, the bears' focus on risks is also clear. They are primarily concerned about the US economic slowdown exceeding expectations and the concentration risks brought by large tech stocks dominating the market. Regarding the latter, investors are similarly divided: 46% of respondents expect the divergence between large-cap stocks and the rest of the market to intensify, while 38% expect it to narrow.
Gold Reigns Supreme: Longing Sentiment Hits a Record High
Notably, among various asset classes, gold has become the most uncontroversial choice. According to the survey report, the ratio of investors bullish on gold's price trend to bears has reached nearly 8 to 1. This is the first time gold has become the most popular long trade in Goldman Sachs' survey, with its popularity being "unprecedented" and even surpassing developed market stocks. The report analyzes that both bulls anticipating the Fed's imminent interest rate cut cycle and bears worried about the Fed's independence and seeking safe-haven assets view gold as an ideal allocation. Additionally, demand from central banks and potential private investors has collectively pushed the conviction to go long on gold to new heights.
Chinese Market in the Spotlight, Dollar Consensus Reemerges
The survey also shows that investor interest in the Chinese market is rebounding. When asked whether US stocks (S&P 500) or Chinese stocks (MSCI China) will perform better this month, investors' views are almost evenly split, indicating that attention on the Chinese market is now on par with that on US stocks. Data shows that as many as 62% of respondents plan to maintain or increase their positions in Chinese stocks. This reflects the enhanced attractiveness of the market after experiencing a strong summer rally, but the report also notes that recent market dynamics have cooled some investors' enthusiasm, raising concerns about potential pullback risks. Furthermore, the dollar's trajectory has once again become a focus. After a brief rebound last month, the consensus to short the dollar seems to have regained the upper hand. However, there is no clear consensus among investors on the key factors driving the dollar's movement for the remainder of the year—whether it be interest rate differentials, Fed policy, or global reserve diversification.
