After Goldman Sachs, Morgan Stanley cuts targets for Chinese stock indices
1 min read 05 Jun 2023, 12:17 PM ISTMorgan Stanley has cut its target for key Chinese stock indices due to delays in earnings recovery, weak currency outlook, and geopolitical uncertainties. The bank has maintained its Overweight recommendation but trimmed exposure.
PremiumMorgan Stanley has slashed its target for key stock indices of China owing to the delay in earnings recovery, weak currency outlook and geopolitical uncertainties.
It cut its MSCI China Index target to 70 from 80 and reduced that for the Hang Seng China Enterprises Index to 7,320 from 8,250, implying about a 15% gain each through June 2024 from the latest close. The global bank has maintained its Overweight recommendation, but has trimmed exposure, Bloomberg reported.
Earlier, Goldman Sachs had also reduced its target for MSCI China on concerns over earnings and currency.
Also Read: Bajaj Finance target price raised by Jefferies, 18% upside expected
Strategists at Morgan Stanley turned bullish on China stocks in December, and further raised its target for the MSCI China Index in January. Most large banks were bullish on China led by the country’s reopening frenzy. However, the latest cut in the target reflects the sharp decline in optimism towards Chinese shares.
While the market’s outperformance may resume from the second half on policy easing, “we acknowledge the significant hurdles to be overcome first and that the window for investors to reassess the market is narrowing," Morgan Stanley strategists led by Laura Wang wrote in a Sunday note, as per Bloomberg.
Also Read: How to tweak your stock portfolio ahead of RBI MPC meeting — explained
As per the latest note, the strategists prefer shares listed on the mainland over offshore ones as the former can benefit from a re-rating of state-owned enterprises and enjoy better liquidity. Their latest target for the CSI 300 Index, at 4,620 for June 2024, is higher than the earlier 4,500 for December 2023.
Recently, the MSCI China and the HSCEI gauge went into a bear market as faltering economy and geopolitical tensions turned key Chinese gauges into global underperformers.
Catch Live Market Updates here
(With inputs from Bloomberg)
