Stocks in Hong Kong and mainland China rallied last week on speculation that the country could ease its super-strict zero-Covid policy. Investors were left disappointed, however, when authorities quashed hopes of a quick reopening of the world’s second-largest economy. Nevertheless, Goldman Sachs strategists, led by Kinger Lau, said China could reopen in the second quarter of 2023 if “a few necessary conditions” were met. These include significantly higher elderly vaccination rates and better access to Covid medicines. This would be a boon for the stock market, according to Lau, who estimates that a full reopening could drive 20% upside for Chinese stocks. “If our estimates prove to be correct, the ‘reopening benefit’ could amount to US$2.6tn … in equity market capitalization terms,” Lau said in a note on Nov. 6. However, he stressed that the market could see 15% downside in a “no- or delayed-reopening scenario.” Lau noted that stock markets tend to pre-trade a reopening about a month in advance, with the “positive momentum” typically lasting for two to three months. “While the reopening roadmap is still unclear, our reopening beneficiaries have outperformed the [MSCI China Index] by 20% since July,” he said. Reopening beneficiaries The bank’s list of reopening beneficiaries comprises 30 names it says are “well placed” to gain from the easing of social distancing and travel curbs. They also collectively trade at prices at the low end of their historical ranges, according to Goldman. China Tourism Group Duty Free is one of Goldman’s picks. The company, which is one of the world’s largest duty-free retailers, also appears on Goldman’s Conviction List — the crème de la crème of the bank’s buy-rated stocks. Read more Pros name 3 picks in one top-performing sector, including a Warren Buffett favorite Want to play rising copper prices? Analysts give these 2 stocks more than 200% upside An investment bank used AI to analyze Q3 earnings calls . Here’s what it found A third of the bank’s list of reopening beneficiaries is made up of companies in the hotels, restaurants and leisure sectors. Those domestically oriented, consumer-facing sectors have been among those hit hard est by China’s zero-Covid policy as tourism dried up, but they’re also likely to respond “more favorably” to a reopening, according to Goldman. The stocks include casino operators Galaxy Entertainment and Sands China, food chain Yum China, as well as Trip.com. A large-scale resumption of domestic and international travel would also benefit airlines and related infrastructure, with Goldman liking China Eastern Airlines and Shenzhen Airport. — CNBC’s Michael Bloom contributed to this report.