Bloomberg Morgan Stanley just did an in-depth survey to see how major investors currently feel about Chinese equities. They were not optimistic. by Julie Verhage
'Brian Kelleher, Morgan Stanley China analyst, and his team find that, on
average, respondents expect the MSCI China Index to rise a mere 1.4
percent over the next 12 months on a weighted average basis. That's the
smallest gain since Morgan Stanley began conducting its survey in March
2013. Meanwhile, more than half of investors think China's A-share
market, the Chinese stocks reserved largely for local investors, is already in a bubble.
'The survey was done between June 8 and 15 and included responses from 39
of Morgan Stanley's clients who were classified as Chinese equity
investors. The change in sentiment among these investors becomes more
apparent when looking at the expected returns over the next 12 months.
Back in May, the majority expected a rise of 10-20 percent for the Hang
Sang Index and the MSCI China Index, and a 0-10 percent return for
'Meanwhile, the respondents' opinions about what's driving Chinese stocks
are as illuminating as ever. On the left side, we have all the things
that could give Chinese stocks a boost. Almost all have to do with
further stimulus measures by China's central bank and reform
initiatives. To the right are the things that could cause stocks to
retreat. They include such fundamentals as a slowdown in the economy and
increasing loan losses at banks.'