Morgan Stanley still likes these Chinese stocks despite a country downgrade

by | Aug 6, 2023 | Financial

Uncertainty is rising for the giant emerging market class of Chinese stocks. Morgan Stanley has decided to take a break, downgrading MSCI China to equal weight while recommending a few consumer and industrial names. That contrasts with a growing number of calls to buy the dip . “Lack of quick follow-through of actionable easing measures could lead to a retreat from the early recovery in sentiment,” Morgan Stanley equity strategists Laura Wang and Fran Chen said in an Aug. 2 note. Chinese stocks have rallied modestly over the last two weeks. Since the July 24 Politburo meeting of top Chinese leaders, different levels of government have stepped up announcements to support the property market and consumption . The Politburo meeting signaled policy easing, but outstanding issues — of debt, property, jobs and geopolitics — need significant improvement for sustainable inflows, the Morgan Stanley analysts said. “Our data shows that as of end June, all the incremental inflow back into Chinese equity market from different global mutual funds had chosen to leave,” the analysts said. All that adds to growing caution over China. Ark Invest’s Cathie Wood has sold off Chi …

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