Morgan Stanley upgrades Chinese equities as country eases Covid curbs

Economic recovery likely to be bumpy as earnings pressure continues, says brokerage

Morgan Stanley has upgraded China's equities amidst optimism about the country relaxing restrictions to slow down the spread of Covid-19.

"Multiple positive developments alongside a clear path set towards reopening warrant an upgrade and index target increases for China," the brokerage said in a note.

MSCI China's return on equity (ROE) is likely to rise from 9.4 per cent to 11.1 per cent by the end-2023. The recovery is set to be bumpy "as earnings pressure continues into early next year", it said.

Morgan Stanley upgraded China to overweight from an equal-weight position.

"Our China evaluation framework finally shows the