China Equity Strategy: Forging New Horizons

Morgan Stanley remains Equal-weight on China equities, favoring onshore A-shares over offshore markets due to their alignment with national industrial innovation and export-driven growth.

Key Takeaways

• 1.Morgan Stanley maintains an Equal-weight rating on China, noting recent underperformance due to the AI memory super-cycle.
• 2.Preference for onshore A-shares (CSI 300) over offshore markets due to concentration in high-end manufacturing and tech innovation.
• 3.Exports are a primary growth anchor, with China positioned to reach 16.5% global export market share by 2030.

Table of Contents

• MSCI China has underperformed Emerging Market YTD mainly due to AI memory super-cycle
• Index performance and Sharpe Ratio
• Underneath the lackluster performance – A more thematic growth focused and better performing market
• China has implemented a systemic framework on industrial upgrade and innovation
• Evolution of recent Five-Year Plans – A clear focus on quality growth and tech innovation
• Exports continue to anchor cyclical growth
• Asia/EM/China 2Q 2027 index targets
• Assessing Morgan Stanley's China framework
• Consensus earnings estimates for MSCI China and CSI300
• Policy to stay on cruise control
• Tier-1 city property sales showing signs of improvement
• USDCNY trend
• US-China relationship
• Foreign mutual fund flows
• Top 50 China/HK holdings
• Morgan Stanley top-down sector allocation
• Key recommended trades for the next 6-12 months
• China Best Business Models
• Morgan Stanley Global Export Champion Stock List
• Morgan Stanley China/HK Focus List
• Morgan Stanley China A-share thematic stock list
• Appendix – Morgan Stanley cross-asset allocation and key forecasts

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