Latest Search
Quote
| Back Zoom + Zoom - | ||||
|
<Research> M Stanley: Xi-Trump Meeting Drives Improved A-Share Sentiment, Prefers A Shrs over H Shrs, Sets 2Q27 HSI TP at 28,400
Recommend 13 Positive 17 Negative 6 |
||||
|
||||
|
Morgan Stanley published a report noting that as the Xi-Trump meeting gets underway and the proportion of 1Q earnings missing expectations declines compared with 4Q, the Morgan Stanley A-Share Sentiment Index (MSASI) has continued to improve, with turnover also rising. The bank believes that, supported by earnings improvement, Chinas strengthening dominance in the global upstream supply chain, and a stronger USD against RMB, there is moderate upside potential in 2Q27. It maintains an "Overweight" view on onshore A shares relative to offshore markets (including H shares). As the MSCI China A Index showed preliminary signs of earnings improvement in 1Q26, the bank expects the earnings outlook to improve moderately starting from 2H26, supported by: (1) stronger export growth amid accelerating capital expenditure cycles in artificial intelligence and energy; (2) RMB appreciation against USD; and (3) easing earnings pressure on large platform companies as intense price competition begins to normalize following stricter government regulations introduced in April. The bank added that valuations may also see a mild re-rating, driven by improving earnings growth, an extension of the US-China trade truce, and Chinese companies rising share in the global high-end supply chain. The bank set new 2Q27 targets of 28,400 for the HSI, 91 for the MSCI China Index, 9,900 for the HSCEI, and 5,400 for the CSI 300 Index, implying upside potential of 8%, 12%, 11% and 11%, respectively. However, Morgan Stanley cautioned that near-term volatility may persist due to: (1) the risk of another round of 1Q earnings missing expectations; (2) the expiry of lock-up periods for large Hong Kong IPOs in July; (3) liquidity uncertainty if US Federal Reserve rate-cut expectations fade or reverse; and (4) global growth risks amid elevated energy prices. As such, the bank expects market dynamics to become clearer and more stable around or after the summer. Morgan Stanley continues to prefer A shares over offshore markets, reflecting stronger exposure to upstream manufacturing/hard technology, IPO-driven domestic participation, and support from state-backed funds. The bank is highly constructive on upstream asset-intensive sectors (materials, industrials, energy) and the technology localization theme (semiconductors). It maintains a moderate allocation to financials and yield plays, while retaining an "Underweight" view on real estate and consumer staples. (da/a) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
AASTOCKS Financial News |
||||
Copied to Clipboard
 |
||||
