After taking profits on some of its Hong Kong stock positions, Morgan Stanley is now shifting its focus to A-shares, with strategists at the firm believing there is still upside potential for Chinese equities.
In a report, strategists Laura Wang, Chloe Liu, and Vicky Wu attributed the pivot to A-shares to several key factors: a stabilization in global markets, renewed momentum in the AI super-cycle, and the gradual absorption of "short-term liquidity tightness" caused by large-scale initial public offerings, including those from memory chip giant CXMT and humanoid robot manufacturer Unitree Robotics.
While the firm remains bullish on Hong Kong stocks, it also noted that the broader market is entering a "consolidation phase" after much of the recent upside has already been priced in.
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