Goldman Sachs has forecast that the Hang Seng China Enterprises Index, which tracks the performance of Chinese equities traded in Hong Kong and is open to foreign investors, will shoot up by about 19% to 13,600 by the end of 2014.

Goldman Sachs, the world's most profitable securities firm before the financial crisis, said economic growth and undervalued shares would help drive the index higher.

The Hang Seng China Enterprises Index closed 0.86% lower at 11,448.35 on 3 December. It has gained a meagre 0.11% so far this year.

The fifth-largest US bank by assets paired its pro-China call with a sell call on copper, saying the price of the metal could wane on "abundant supply and a lack accelerating demand." The commodity strategy team forecast copper prices would hover around $6,200 per metric ton by the end of 2014, a near 13% drop from current levels.

Goldman labelled the combined position on Chinese equities and copper as its fourth top trade recommendation for 2014.

Goldman's analyst Noah Weisberger said the trade could generate a return of 25%. However, he warned that a further tightening of financial conditions in the world's second-largest economy could weigh down on stock prices and push up copper prices.

The bank's China economists remain optimistic about China's zeal to implement broad economic and political reforms, which could help sustain the nation's growth.

Goldman also forecast that China's economy would expand by 7.8% in 2014.

Weisberger said in a note to clients: "Chinese equities are about flat, year to date, have underperformed for much of the last several years".

In addition, Asian-focused funds are "significantly underweight" China, which "further suggests to us that very little 'China upside' has been priced."

China Reforms

China's securities regulator announced over the weekend that it would repeal the 13-month freeze on initial public offerings in January.

The news led to a rally in financial stocks on 2 December as market players bet that IPO reforms would boost fees for brokerages and improve banks' funding.

China is also looking to improve transparency in its budget and tax systems as part of wider reforms to revive its economy.

In November, Chinese Finance Minister Lou Jiwei told the official People's Daily that the country requires more transparency in the budget system and more fairness in the tax system. The country would suspend its current system of preferential tax policies for different regions in order ensure fair competition, according to Lou.

Earlier, China unleashed a flurry of detailed economic and social reform plans in a bid to secure the country's future growth.

According to a document released by the Communist Party, following a four-day conclave of its top leaders, China said it plans to cut red tape by scrapping residency restrictions in small cities and townships, while also integrating urban and rural social security systems.

This includes the establishment of an exchange market for rural property rights transfers.

The country also pledged to accelerate capital account convertibility and push ahead with an environmental tax.

Among other economic reforms, China plans to set up a debt risk alert mechanism as well as standardising the way local and central government debt is managed.

Property tax and resource tax are also tipped to be accelerated.

China also said it would loosen its one-child policy, abolish the much-criticised labour camp system and reduce the use of the death penalty.