Goldman basket of U.S. stocks linked to China is starting to beat the market — Here's what's in it
U.S. stocks heavily tied to China have begun to outperform the rest of the market as the world's second largest economy country seeks to return to a pre-pandemic normal after ending most Covid controls, according to Goldman Sachs. "Recent easing of China's zero-Covid policy represents one upside risk to S & P 500 profits via stronger 2023 global growth," David Kostin, Goldman's head of U.S. equity strategy, said in a note to clients. Since the start of the fourth quarter, a basket of stocks with high China sales exposure has outperformed stocks with high domestic sales exposure by eight percentage points, Kostin said. On Dec. 7 , Chinese authorities removed virus testing requirements and health code checks for domestic travel. Beijing had previously implemented a zero-Covid policy in an attempt to shield China's 1.4 billion people from the virus, but the policy also limited economic activity and cut off the outside world. Still, Goldman cautioned that a faster-than-expected exit from the zero-Covid policy nonetheless suggests weaker near-term growth as the infection rate dramatically increases. For investors wanting to capitalize on the rebound, here are the U.S. stocks with the highest percentage of revenue tied to China, according to Goldman. U.S. companies with a major China footprint include iPhone maker Apple , which has rallied more than 2% year to date. Casino operators Las Vegas Sands and Wynn Resorts are benefiting from the reopening of gambling in Macao. AAPL YTD mountain Apple shares year-to-date Starbucks , the world's largest coffee chain, as well as Tapestry , the owner of Kate Spade and Coach, are also heavily exposed China. Chemicals companies Air Products & Chemicals , Albemarle Corp. and auto parts supplier BorgWarner are also on Goldman's list. — CNBC's Michael Bloom contributed reporting.