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.

On Sunday, strategists such as Morgan Stanley's Laura Wang wrote in a report:

There have been positive developments on many fronts, and it is necessary to improve the rating of (Chinese stock market). [the Chinese stock market] is in the early stages of earnings correction and valuation recovery for several consecutive quarters.

Morgan Stanley upgraded its rating on Chinese stocks to Overweight from Equal-weight.It is worth noting that Morgan Stanley has been rating Chinese stocks for nearly two years since January 2021.

In addition, Morgan Stanley raised its target for the MSCI China Index from 59 to 70 at the end of 2023 and the Hang Seng Index to 21200 from 18200. The new target also means that big Motors bet that the Chinese stock market still has more than 10% room to rise by then.

The performance of the Chinese stock market in the past period of time is indeed very eye-catching. The CSI 300 index rose nearly 10 per cent in November, its biggest monthly gain since July 2020, while the Hong Kong-listed index of mainland Chinese stocks rose 29 per cent in November, its biggest monthly gain since 2003. it fell 40% from January to October.

Morgan Stanley also proposes to further increase its holdings in consumer companies and increase the allocation of offshore Chinese stocks. Given the earnings growth of emerging market stocks and the expansion of price-to-earnings ratios, the agency is nowWe are more confident that a new bull market cycle is beginning.

Analysts believe 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 have hit bottom.

Asset manager Abrdn has joined a growing number of bullish institutions on Chinese stocks, arguing that now is a good time to buy Chinese stocks. The company manages $46.5 billion in Asian assets.

Rene Buehlmann, CEO of Abrdn Asia Pacific, told the media on Sunday:

I do think that Chinese stocks are undervalued, to say the least, that investors should return to China.

As China's recovery gains momentum, global investors are becoming more and more optimistic. Goldman Sachs Group said last month that China's stock market would outperform the world in 2023; Bank of America Corporation pointed out that it had taken a "tactical" positive attitude towards China; JPMorgan Chase & Co said the MSCI China index could rise 17% between now and the end of 2023, driven by a 14% increase in earnings per share and a target price-to-earnings ratio of 10.5 times.

Buehlmann said in an interview with the media last week that the longest-term growth potential appears to be in areas such as China's consumer sector, health care, wealth-related financial services, renewable energy and digital innovation.