Morgan Stanley Upgrades Outlook on China Stocks, Sees 4% Upside

Morgan Stanley has upgraded its outlook on offshore Chinese equities from bearish to optimistic, forecasting a sustainable rally driven by advancements in artificial intelligence and improved geopolitical dynamics. The firm now expects the MSCI China Index to reach 77 by the end of 2025, a notable increase from its previous target of 63, signaling a potential 4% rise from recent closing prices. Analysts attribute this shift to several factors, including corporate self-help measures, a shift in regulatory attitudes, and diminishing macroeconomic influences. This change mirrors a broader trend among Wall Street banks, with firms like Goldman Sachs also expressing bullish views on Chinese stocks. The report emphasizes that technological breakthroughs, particularly in AI, are key drivers of renewed confidence in the market. Morgan Stanley's pivot marks a significant change in how global investors are viewing Chinese equities, suggesting a more favorable outlook ahead.