Why should we have a high allocation to China? Dalmore made a big statement

On December 9, Xing Ziqiang, chief economist of Morgan Stanley China, and Wang Ying, chief equity strategist of Morgan Stanley China, explained their views on China’s stock market and economy in 2023 in detail at an online media event. The core views shared by the two include: China’s GDP growth is expected to reach 5% next year; consumption is the main engine of economic growth next year; in the long run, China’s economy is expected to maintain a growth rate of around 4%. Although slower than before the epidemic, it is already a remarkable result in the world; five positive factors resonate, Morgan Stanley has adjusted the Chinese stock market to a high allocation; offshore Chinese stocks have a short-term advantage over A-shares; under the framework of economic restart, there can be more Focus on the group of stocks that will directly benefit from the reopening. In the medium to long term, top-down policies will support structural development opportunities. We are optimistic about the green economy, high-end manufacturing automation, information technology industry, and consumption for the broad masses of the people, that is, the beneficiary stock group of policy outlets. | Related reading (China Fund News)

Xu Yue

I think the Chinese economy and the Chinese stock market should be viewed separately.

Under the situation that the epidemic control has been substantially loosened, it is the industry consensus that China’s economy will bottom out next year, and 4-5% is the forecast given by most investment banks and economists, and some are more optimistic, thinking that 5-5% A 6% increase is also possible. I have no doubts about this. After all, after China’s economy has been hit hard in 2020 and 2022, economic development has become a common expectation of the upper class and the people.

But for A shares, I personally think we should be cautious. First of all, there are not many targets with investment prospects in the A-share market at present, and their stock prices are not low. For example, leaders such as Ningde Times and BYD should not have much room for future growth. Secondly, it is difficult for China’s monetary policy to remain loose forever. If the economy shows signs of overheating, the monetary policy will inevitably change, which will also restrain the expectation of A-shares’ rise.

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