In a new report out this week, Goldman Sachs analyst Kinger Lau gives the firm’s take on the market turmoil in China. Despite fears of a market crash, Lau believes that the recent drop in the Chinese market is actually just a large bull market correction.

Correction, Not Crash

According to Goldman, global bull markets that have occurred during the last 40 years have witnessed a correction of at least 20 percent 44 percent of the time. These corrections are driven primarily by shrinking PE multiples, but rarely do they contract below 15 times.

Goldman believes that what China is currently experiencing is a standard bull market correction, not a transition into a bear market.

Deleveraging Is Key

In the A-shares market, Goldman believes…

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