Morgan Stanley Lifts CSI 300 Target to Near Top of 2015 Bubble

One of China’s main stock gauges will test its highest level of the past decade over the next year as a recent rally extends, according to Morgan Stanley.

  • “A Chinese equity bull market is building with rising volumes amid improved earnings visibility and liquidity, plus regulatory/policy support,” strategists including Laura Wang and Jonathan Garner wrote in a note dated Tuesday
  • The bank set its 12-month target for the CSI 300 Index at 5,360, implying an upside of more than 13% from its 4,726.09 level at 11:30 a.m. Hong Kong time on Wednesday
    • NOTE: The gauge peaked at 5,380.43 intraday on June 9, 2015, before tumbling more than 30% by the end of the year
Morgan Stanley Lifts CSI 300 Target to Near Top of 2015 Bubble
  • “A-shares are benefiting from strong new fund launches and rising retail investor account openings in the context of regulatory support and an ongoing market reform push,” the strategists wrote
    • READ: China Stock Technicals Are Long Way From Bubble Territory: Chart
  • Overheating may lead to regulatory tightening, the note said, adding that the A-share sentiment is “still below levels associated with unsustainable investor euphoria in June 2015”
  • The bank’s other targets include:
    • MSCI China: 103, representing a 7.2% gain from 96.01 at 12 p.m. Hong Kong time
    • Hang Seng Index: 28,000, versus 26,063.51 at present
    • HSCEI: 11,510, up 7.3% from current level

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