Japan Unemployment Falls in February, Signaling Market Improvement 
BOJ May Cut Super-Long Bond Purchases in Q2 to Advance Policy Normalization 
Asian Stocks Slide as Trump Tariff Fears Grow Despite China PMI Boost 
Goldman Sachs Raises U.S. Recession Odds Amid Tariff and Inflation Concerns 
China’s March PMI Beats Expectations Amid Strong Stimulus Push 
South Korea's March Exports Rise Amid Trade War Concerns 
RBA Holds Rates at 4.1%, Signals Cautious Path Amid Inflation Risks 
Europe Emerges as Strategic Investment Hub Amid Defence and Infrastructure Boom 
Oil Prices Hold Steady Amid Trump’s Iran Threats and Geopolitical Tensions 
Wall Street Plunges as Inflation Fears and Tariff Tensions Rattle Tech Stocks 
Myanmar Rebels Disrupt Global Rare Earth Supply, Challenge China's Control 
US Stock Futures Slip Amid Recession Fears and Trump Tariff Plan 
Taiwan Prepares for U.S. Tariffs as Lai Urges Swift Contingency Measures 
Gold Prices Hit Record $3,106 Amid Tariff Fears and Geopolitical Tensions 
Asian Stocks Rebound as Markets Brace for U.S. Tariffs and RBA Holds Rates 
Trump Threatens Tariffs on Russian Oil Buyers Amid Frustration with Putin 
China's equity markets are bracing for a volatile 2025, cautions Morgan Stanley, highlighting downward earnings trends, potential 25% U.S. tariffs, and escalating geopolitical tensions. Analysts favor robust A-shares despite the looming headwinds.
China's Equity Markets Face Volatility in 2025
Due to concerns over geopolitical tensions, possible tariffs, and downward profit pressures, analysts at Morgan Stanley predict that China's equities markets will be quite volatile in 2025, Investing.com reports.
"We still expect a more bumpy China equity market in 2025," the bank noted in a letter shared on Friday. Deflationary trends and chronic macroeconomic headwinds are brought to light by them.
Following an 8-point decline to 77% on the Morgan Stanley A-Share Sentiment Index, the bank observed that investor mood in the A-share market has already diminished.
Morgan Stanley reported a 10%-17% decline in daily turnover across major categories from November 21-27. These segments include A-shares and ChiNext.
Earnings Revisions and Tariff Risks Dominate Concerns
Also, they point out that the market's anxiety is being reflected in the acceleration of downward earnings revisions.
Some say that the possibility of a 25% tariff on Chinese imports by the next Trump administration is a major worry for the macroeconomy.
The housing industry displayed contradictory signals, with higher sales but low developer confidence, according to Morgan Stanley. On the one hand, exports are resilient because of competitive pricing. For November, the manufacturing PMI is anticipated to remain unchanged at 50.1, indicating a moderate expansion.
Morgan Stanley's Strategy for A-Shares in 2025
According to Morgan Stanley, China's equity market is expected to face a number of challenges in the coming years. These include ongoing weak earnings until 2025, a weakening of the USDCNY to counteract tariff effects, higher equity risk premiums due to a more aggressive US policy stance, the possibility of heightened tensions between the US and China, and profit-taking after a relatively strong performance so far this year.
Morgan Stanley still favors A-shares over offshore stocks, even though they have their share of problems. In addition to the direct liquidity support from the PBOC's swap and re-lending initiatives, they point out that A-shares are less sensitive to geopolitical and currency swings.
In 2025, the company plans to avoid firms that are vulnerable to tariffs or supply chain issues and instead prioritize A-shares with excellent profitability and return on investment potential for shareholders. For this unpredictable environment, they have highlighted preferred trades on their China/Hong Kong Focus List and A-share Thematic List.
