Morgan Stanley is bullish on China's stock market again after nearly two years, joining a growing number of Wall Street banks that are optimistic about China's economic prospects. At present, measures are being taken to relax measures to deal with the epidemic situation of COVID-19. Morgan Stanley upgraded its rating on Chinese stocks to "overweight" from "holding wait-and-see" since January 2021. The investment bank raised its target for the MSCI China index to 70 from 59 by the end of 2023 and the Hang Seng to 21200 from 18200. The new target price means an increase of more than 10%.

Strategists, including Laura Wang, wrote: "multiple positive developments and a clear path to reopening attest to the upward revision of ratings. In terms of earnings revision and valuation, we are at the beginning of a multi-quarter recovery. "

A series of positive developments are helping to improve the outlook for Chinese assets, with a growing number of market watchers calling for the Chinese stock market to bottom out. The CSI 300 index rose nearly 10 per cent in November, its best month since July 2020.

Morgan Stanley suggests further increasing exposure to reopened beneficiaries such as consumer goods companies and increasing the allocation of offshore Chinese stocks. Given the earnings growth and price-to-earnings ratios of emerging market stocks, the agency is now "more confident that a new bull market cycle is beginning".