Goldman said the earnings are ''solid'' and that Chinese equities have ''reasonable valuations'' while noting the interest rate increase could serve to remove risk overhang. Last week, Chinese stocks officially entered bull market territory after the Shanghai Composite (SHA:000001) advanced more than 20% off its July lows.
Analysts said the rate hike could also serve to stimulate more foreign investment in China. A stronger yuan, which is a possibility following the rate hike, would stimulate demand for yuan-denominated assets. Analysts said higher interest rates in China may serve as a sign the worst is behind the already robust Chinese economy, the fastest growing major economy in the world.