Morgan Stanley bullish on China

Well-established: A file picture shows an employee behind a glass wall with the logo of Alibaba at the company’s headquarters on the outskirts of Hangzhou, Zhejiang province. The company is among several Chinese firms that have already emerged as domestic champions. – Reuters

MORGAN Stanley expects China to avoid a financial shock and achieve high-income status by 2027. Its view is that moving to higher value-added activities will propel the economy forward and drive the continued medium-term outperformance of MSCI China versus MSCI Emerging Markets, providing significant investment opportunities.

China’s macro challenges have been well-telegraphed – a high leverage ratio, excess capacity in industrial segments, an over-reliance on investment as a growth driver. More recently, the risks of protectionism have cast an additional shadow.