• Chinese shares may advance another 15%-20%, Goldman says

• HSBC, BlackRock have also turned more bullish on China

Goldman Sachs Group Inc. upgraded its call on Chinese stocks to overweight, as it joined a growing camp of optimists that are touting the positive impact of Beijing’s stimulus blitz.

Gauges tracking the nation’s equities may rise another 15%-20% if authorities deliver on policy measures, strategists including Tim Moe wrote in a note dated Oct. 5. Valuations are still below the historical average, earnings may improve and global investors’ positioning remains light, they added.

The recent stimulus announcements “have led the market to believe that policy makers have become more concerned about taking sufficient action to curtail left-tail growth risk,” the strategists wrote.

Beijing’s stimulus bonanza has sparked a flurry of upgrades by Wall Street heavyweights including HSBC Holdings Plc and BlackRock Inc. as expectations grow that the once-beaten down stock market has finally turned a corner. The CSI 300 Index has rallied 27% from a low reached in September and traders will watch to see if it builds on its gains when onshore markets reopen on Tuesday after a holiday.

Goldman lifted its target for the MSCI China Index and benchmark CSI 300 Index to 84 and 4,600 respectively, implying a total return of 15%-18% from current levels.

Still, Goldman warned about potential challenges, including a weaker-than-expected fiscal stimulus push, profit taking, as well as the US elections and tariff risks.

Goldman’s team downgraded Hong Kong-listed Chinese equities last November, citing modest earnings growth. Since then, the gauge has been largely range-bound until last month and rose as much as 2.7% on Monday.