Morgan Stanley sounds the horn for "Buy China": Foreign investment interest in Chinese assets reaches a new high since 2021, capital inflow is about to ignite!

Morgan Stanley stated that American investors' interest in the Chinese stock market has reached its highest level since 2021, and the reallocation of funds to China has just begun, which is expected to bring significant capital inflows.

According to Wind Trading Desk, Morgan Stanley's latest report shows that American investors' interest in the Chinese stock market has reached its highest level since 2021. In the investment bank's recent 1.5-week marketing roadshow in the U.S., over 90% of investors explicitly expressed their willingness to increase their investment exposure to the Chinese market.

This positive shift is primarily driven by China's global leadership in fields such as humanoid robots, AI technology, and biomedicine, as well as government efforts to stabilize the economy and support the stock market.

Morgan Stanley believes that as American investors refocus on the Chinese market, significant capital inflows are expected, and investors should pay attention to investment opportunities in the A-share market related to artificial intelligence/semiconductors, humanoid robots, and new consumption themes.

Four Key Drivers of Increased Investor Interest

Morgan Stanley mentioned four key drivers, including technological leadership, gradual improvement in the policy environment, significant improvement in liquidity conditions, and rising demand for diversified allocation.

1. Technological Leadership: American investors recognize China's global dominance in specific technological fields such as humanoid robots/robot technology and biomedicine/drug development, making participation in the Chinese market a necessary choice. These technological advantages have become important factors that investors cannot ignore.

2. Gradual Improvement in the Policy Environment: Chinese policymakers are taking incremental measures to stabilize the economy and have clearly expressed their intention to support the stock market. Investors believe that the worst period may have passed, and the positive changes in policy direction have enhanced investment confidence.

3. Significant Improvement in Liquidity Conditions: The liquidity situation in the Chinese market is significantly improving, which helps support a longer-lasting stock market rebound. A good liquidity environment provides investors with better mechanisms for entering and exiting the market.

4. Rising Demand for Diversified Allocation: Currently, American investors' asset allocation is overly concentrated in the U.S. market, and the demand for diversified investments is rising, providing new opportunities for the Chinese stock market.

Investment Scope Expanding to A-share Market, Fund Allocation Still in Early Stages

Historically, American investors have primarily focused on the ADR (American Depositary Receipt) sector due to trading time and time zone limitations. However, this situation is changing, with more themes and sectors gaining attention in the Hong Kong and A-share markets, including AI/semiconductors, humanoid robots, and new consumption.

Morgan Stanley's survey shows that quantitative funds and macro funds believe that when there is a lack of sufficient time or resources for bottom-up stock selection, trading the Chinese stock market through A-share ETFs and index futures products is a quick and direct way to participate. However, the preferred market order for American investors trading Chinese stocks remains: ADR > Hong Kong stocks > A-shares.

Morgan Stanley emphasizes that despite the surge in investor interest, the reallocation of funds by American investors to China has just begun. Many investors have stopped investing in the Chinese market over the past few years and will need time to do their homework at the individual stock level, especially in the areas of humanoid robots/automation and new consumption themes The latest data on capital flows and positions in China shows that among the three different types of portfolios managed by American investors (global, global emerging markets, and Asia excluding Japan), only the underweight position in the Asia excluding Japan portfolio has significantly decreased. Most investors belong to the global and emerging market portfolios, and it is expected that the capital allocation for these portfolios will increase significantly.

Risk Warning and Disclaimer

The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk