According to the Morgan Stanley Research report, according to the bank's survey, the budget growth for software and professional services is expected to decrease from 17% to 16% in 2022, while the overall IT budget growth will fall from 17% to 13%. According to some corporate chief information officers (CIO), for the lagging IT projects in the second half of 2022, only 27% of the gap will catch up in the second half of the year. This means that if listed companies do not lower their guidance targets and continue to lag behind, there is a high probability that they will not achieve the 2022 guidance targets. At the same time, the persistence of weak demand could make suppliers' pricing strategies more aggressive, as 82 per cent of CIO have noticed stronger pricing discounts, compared with 56 per cent in the first half of the year. The bank believes that macroeconomic fluctuations mean a decline in willingness and ability to pay. Listed companies still rarely mention this, but the bank sees it as the biggest downside risk.

The bank is now more cautious about the weak outlook and the late impact of the downward cycle. The unfavorable factors may come from the competition of the industry, while the improvement of the epidemic situation is a positive factor. Contrary to market opinion, the bank has yet to see a positive trend towards software localization. The bank has now lowered its target price for Kingdee International Software Group (00268) by 34 per cent from HK $19 to HK $12.50. In addition, Kingdee International Software Group is the best data software vendor regardless of uplink or downlink scenarios.