Morgan Stanley's report indicates that they compare recent mainland policies with historical policy actions and financial system data to examine the impact on crediting and the risk cycle. The bank believes that improved policy communication will reduce significant downside risks and risk premiums.

The bank believes that the recent policy shift is not a 180-degree change, but it helps improve confidence in the remaining time of the cycle. The new policy tone may help investors focus on the outlook after this cycle, but the property and industrial cycles are expected to bottom out only in the second half of next year.

The bank believes that insurance stocks are most likely to benefit in an environment where economic downside risks decrease and long-term growth is rational but more cyclical. The current valuations of relevant stocks remain attractive. AIA (01299.HK) and Ping An Insurance (02318.HK) are still the top choices for insurance stocks. High dividend yield banks also benefit from reduced risk concerns. The bank prefers China Postal Savings Bank (01658.HK) and Bank of Ningbo (002142.SZ).