Morgan Stanley raises MSCI China, Alibaba price targets in second bullish call on Chinese stocks in a month
- The US investment bank expects the MSCI China Index to climb 14 per cent to 80 by the end of 2023, compared with its previous target of 70
- Analyst Gary Yu also lifted the target price for Alibaba’s ADR to US$150 from US$100, after raising it for the first time in two years in November
Morgan Stanley has lifted the target for a major Chinese offshore stocks index by 14 per cent this year, with the US investment bank’s latest bullish call coming just a month after it upgraded the rating on Chinese onshore equities to overweight.
The MSCI China Index, which tracks 714 companies listed at home and abroad with a combined market valuation of US$2 trillion, will probably rise to 80 by the end of 2023, compared with the previous target of 70, analysts led by Laura Wang at Morgan Stanley wrote in a research note on Monday.
The bank also raised the price target for Alibaba Group Holding’s American depositary receipts (ADRs) by 50 per cent and China’s growth target for this year by 0.3 percentage point.
“We believe the market is underappreciating the far-reaching ramifications of reopening and the possibility that a robust cyclical recovery can occur despite lingering structural headwinds,” Wang said in the note. “Economic, regulatory and Covid policies are aligned for the first time in four years, likely resulting in stronger spillover from existing and upcoming easing.”
Major global investment banks have turned bullish on Chinese stocks since Beijing scrapped the rigid pandemic restrictions in November and shifted the focus to economic growth. Goldman Sachs expects the MSCI China Index to rise by 15 per cent from its current level, while UBS Group said that earnings growth for Chinese companies listed onshore will accelerate to 15 per cent this year from 4 per cent in 2022.
