US LNG exports surge but will buyers in China turn up?
Investing.com -- Morgan Stanley (NYSE:MS) has cut exposure to Chinese technology stocks and turned to more defensive names, as rising trade tensions and macro uncertainty weigh on risk assets.
In its latest China equity strategy update, the bank removed GDS Holdings (NASDAQ:GDS) and Meitu Inc (HK:1357) from its China/HK Focus List and downgraded the Information Technology sector to Equal Weight.
In their place, Morgan Stanley added Kweichow Moutai (SS:600519) and China Resources Power Holding (HK:0836), marking a shift toward sectors with greater earnings visibility and yield stability.
The Wall Street firm also upgraded Consumer Staples to Equal Weight.
Kweichow Moutai was added for its “greater certainty and potential stimulus to domestic consumption.”
The company’s 9% sales growth target for 2025 signals a balanced strategy, supported by strong branding, healthy inventory levels, and a valuation the analysts believe prices in most industry headwinds.
“At 21x 2025e P/E, we see limited downside and see upside as the proxy for an improving policy environment and market sentiment toward domestic consumption,” strategists led by Laura Wang noted.
The stock is also expected to benefit from policy support and liquidity flows tied to the government’s “National Team” interventions.
China Resources Power, meanwhile, was added for its stability during periods of economic and geopolitical stress.
“CRP can maintain at least a 5% dividend yield this year in all of our coal price scenarios; its yield shows higher certainty vs. major peers,” strategists said.
The company has locked in tariffs for 2025 and remains positioned to benefit from falling coal prices and strong utilization rates.
Overall, Morgan Stanley recommends a more balanced portfolio strategy for Chinese equities, combining defensiveness with selective A-share exposure.
This positioning aims to cushion portfolios from the downside risks associated with the “uncertainty around tariffs and exacerbated downside risk for macro growth and risk assets globally.”
Strategists said they are prepared to make incremental changes as more clarity emerges on potential progress in U.S.-China trade talks and any significant step-up in policy easing from Beijing.