On Friday, Wang Yan, Chief China Equity Strategist at Morgan Stanley, stated that undervalued and underallocated Chinese stocks are expected to attract capital inflows against the backdrop of a weakening US dollar and a strengthening renminbi. She believes that offshore markets, such as Hong Kong stocks, may perform better, as the appreciation of the renminbi provides more significant support to offshore markets. Wang specifically expressed optimism about Chinese tech stocks, citing their strong innovation capabilities and promising long-term prospects. Morgan Stanley indicated that Chinese stocks have the potential to attract global capital allocation.
During a media briefing on Friday, May 30, Wang Yan emphasized that global institutional investors are seeking to diversify their asset allocations amid a weaker US dollar. Reasonably valued and underallocated Chinese stocks are poised to draw some of these inflows. She pointed out that offshore markets, like Hong Kong stocks, could outperform because the renminbi’s appreciation against the US dollar offers more substantial support to these markets. Additionally, Trump’s policies tend to depress the dollar, and historically, Hong Kong stocks have performed better during periods of dollar weakness, as they more closely reflect foreign investor sentiment. Wang Yan is particularly bullish on the Chinese technology sector, highlighting its innovation strength and global competitiveness, with a “quite bright” long-term outlook. However, she also cautioned that trade war uncertainties will continue to cause market volatility, recommending that investors appropriately allocate high-dividend state-owned enterprise stocks in their portfolios to enhance defensive attributes. A report distributed at the media briefing noted that key catalysts to watch include the expiration of the 90-day US-China tariff truce in mid-July and the Politburo meeting in late July, which will assess first-half growth and fine-tune policies. Furthermore, Ming Ming, Chief Economist at CITIC Securities, stated on Wednesday that the renminbi may show a “volatile but stronger” trend in the second half of the year, influenced by the interplay of internal and external factors. He also pointed out that the US faces structural issues such as the Triffin dilemma and high fiscal deficits, with inflation not fully subdued and the economy showing signs of weakness, leading to Federal Reserve hesitation on interest rate cuts. In contrast, the Chinese economy is gradually recovering amid fluctuations, with policy room still available, and GDP is expected to grow around 5% by 2025. Valuation metrics indicate that A-shares remain attractive. Risk Warning and Disclaimer: Markets are risky; investments require caution. This article does not constitute personal investment advice and does not consider individual users’ specific investment objectives, financial situations, or needs. Users should assess whether any opinions, views, or conclusions herein suit their particular circumstances. Investments based on this are at one’s own risk.
