Chinese stocks to outperform global peers as curbs ease: Morgan Stanley

Chinese equities will outperform the broad emerging markets and even their global peers as Beijing’s decisive moves toward reopening continue to help sentiment recover, according to Morgan Stanley.
 

“We believe execution follow-through and other factors would help lift market sentiment,” strategists led by Laura Wang wrote in a research note dated Dec. 8. The Wall Street bank has turned bullish on Chinese stocks after almost two years, lifting its rating to overweight from an equal-weight position on Sunday.

Average daily turnover for China’s ChiNext Index and overall mainland-traded A-shares increased 25% and 19% respectively December 1 to 7, from the previous cycle, according to the strategists.

Morgan Stanley also believes other major upcoming events may also help the market navigate the near-term turmoil. Those potential drivers include a PCAOB audit inspection result expected as early as late December, US Secretary of State Antony Blinken’s planned visit to China and the Central Economic Work Conference that will offer greater clarity on the path toward a Covid pivot and 2023 macro targets.