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The
bank's moves included raising its Chinese economic growth
forecast 0.3 percentage points to 5.7%, lifting its yuan target
to 6.65 to the dollar and predicting another 16% jump in MSCI's
fast-rebounding Chinese equity index. "We believe the market is
under-appreciating the far-reaching ramifications of reopening,
and the possibility that a robust cyclical recovery can occur
despite lingering structural headwinds," Morgan Stanley's
analysts wrote in a note published late on Monday.
For the stock market, which is already up 45% up since late
October, they likened the current situation to that in late 2008
and early 2009 after the global financial crisis when many
international investors had sold down their positions and were
left underexposed to Chinese markets.
"Don't underestimate this rally," the note added, pointing out
that China's growth rate this year is likely to be more than six
times faster than that of the United States in real terms.
"Not only does that mean that MSCI China absolute earnings per
share growth and return on equity is set to surge, but that an
even more dramatic shift in relative terms is now in sight," the
bank's analysts said.
On the expected rise in China's currency, the bulk of the
strength could come in the first half of the year they
predicted, before moderating when a more meaningful recovery in
travel abroad takes hold.
Its target of 6.65 yuan to the dollar compares to Tuesday's rate
of 6.78 per dollar and follows an 8.5% rise from just over 7.32
at the start of November.
(Reporting by Marc Jones; Editing by Conor Humphries)
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