WALL Street brokerages have turned more cautious on Chinese stocks as persistent deflationary pressures and geopolitical tensions cloud the outlook for earnings in the world's second-largest equity market, reports Bloomberg.
Morgan Stanley strategists reduced Chinese equities to a slight underweight within the region, while Goldman Sachs trimmed its index target on the MSCI China Index to reflect a less favourable macro backdrop.
The latest calls represent a rapid turnaround from their upbeat stance on the market following Beijing's stimulus blitz in September.
The MSCI China Index has fallen about 15 per cent from a recent peak as excitement over the prospect of more government support fizzles and Donald Trump's victory in the US election raises concerns over higher tariffs on China.
'We see a low limited chance that China's government will front-load enough fiscal stimulus to target consumption and housing in 2025 due to concerns over moral hazard and a premature transition into a 'welfare state,'' Morgan Stanley strategists including Laura Wang wrote in a note. That presents 'even stronger headwinds on corporate earnings and market valuation in the coming months.'
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Morgan Stanley strategists reduced Chinese equities to a slight underweight within the region, while Goldman Sachs trimmed its index target on the MSCI China Index to reflect a less favourable macro backdrop.
The latest calls represent a rapid turnaround from their upbeat stance on the market following Beijing's stimulus blitz in September.
The MSCI China Index has fallen about 15 per cent from a recent peak as excitement over the prospect of more government support fizzles and Donald Trump's victory in the US election raises concerns over higher tariffs on China.
'We see a low limited chance that China's government will front-load enough fiscal stimulus to target consumption and housing in 2025 due to concerns over moral hazard and a premature transition into a 'welfare state,'' Morgan Stanley strategists including Laura Wang wrote in a note. That presents 'even stronger headwinds on corporate earnings and market valuation in the coming months.'
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