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US Treasury Secretary Janet Yellen’s upcoming visit to China and the expected gradual easing policies by the Chinese government are both moving the Chinese stock market in a right direction, but more measures are needed to reinforce the macroeconomic stabilization and support the recovery of the stock market, Morgan Stanley said in a research note.
Yellen’s visit to China is another step towards normalization and stabilization of US-China relations in the short to medium term, indicating more positive developments, it said.
A possible visit to the US by Chinese Foreign Minister Qin Gang and more high-level talks between the two countries will prepare for future meetings between US President Joe Biden and Chinese Leader Xi Jinping, which could further ease geopolitical concerns in the market, the bank estimates.
Morgan Stanley reiterated that macroeconomic stabilization and the authorities’ policy stance remained the most important factors for the Chinese stock market.
It advised investors to pay close attention to the next 2 – 4 weeks, when more stimulus measures are expected to be introduced, with the State Council meeting in mid-July and the Politburo meeting at the end of this month.