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Morgan Stanley picks China stocks for the second half of the year

An investor watches computer screen at a stock exchange hall on July 6, 2020 in Fuyang, Anhui Province of China. Lu Qijian | VCG | Getty Images. Sketched by the Pan Pacific Agency.

BEIJING, May 25, 2021, CNBC. Morgan Stanley analysts are so cautious on China they’re downgrading a once hot sector — and turning to some individual stocks, CNBC reported.

Multiple uncertainties, such as inflation, monetary policy tightening and greater regulation on Chinese technology companies, will weigh on the overall market, Asia equity strategists wrote in a mid-year China stocks outlook on May 17.

In this environment, one of the few certainties is that pricing power will be a key driver of outperformance this year, the analysts wrote. That makes stock picking a critical investment strategy, they said.

Here are five of their top picks among mainland Chinese and Hong Kong markets for stocks set for double-digit gains.

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