While many investors all across the world predict that the economy in China will be facing downturns that are calamitous, Morgan Stanley expert team is making predictions that are just the opposite. They stated that the economy of China is the largest in the entire Asia, and it will continue to prevent any shocks in the finances and will be creating ample opportunities for the investors globally.
Many analysts have predicted that China will be overcoming the current macroeconomic hurdles and the financial shock prospect will go into transition to form an economy with high income by the year 2027. This will lead the per capita income of China to rise from 8100 dollars to 12900 dollars.
On the other hand, other analysts predict that the growth of China is likely to decrease by the rate of 4.6 percent in the upcoming years between 2021 and 2025.
If the prediction of the analyst is correct that China will overpower its financial crisis, then this will permit MSCI China to outperform the larger emerging markets of MSCI.
The analysts of Morgan Stanley prepared a report which was 118 pages and states records that showed that in the past 15 years, China MSCI has beaten the emerging market MSCI by 3 percent each year.
They also added that China MSCI had also outperformed S&P 500 beyond their expectations but this outperformance has recently paused. The analysts have set a target if 66 for the MSCI of China which will be complimented with an upswing that is cyclical with respect to the earnings and be also inclusive of multiple modest expansion on the flows that are Southbound flows via the programs of Connect.
The programs of Connect are reference to the collaboration between the mainland markets of China that is, Shanghai and Shenzhen and the stock exchange of Hong Kong. This program permits the foreign investors to purchase shares of China A with less restrictions from Hong Kong.
The report of Morgan Stanley cited that the transition of China into the economy of the highest kind will provide a larger scope of growth and the country will be pushed towards manufacturing that is added by value, increased consumption growth and multiple industries that will be service-centric.
The analyst said that with all these above transformations, the sectors of healthcare, consumer as well as the IT will boom and flourish. Some of the firms of China that will greatly benefit from these would be the ANTA sports Product, Ctrip.com, Alibaba Group and Bank of China limited.
Though the analysts are optimistic about the growth of China, they also said that China is at a stage where it faces risks both in the domestic and external front that could hinder the prospects of its growth in the future.