M UpdateChina Equity Strategy | Asia PacificA-Share Sentiment Dropped ahead of Results Season Morgan Stanley Asia Limited+Laura WangEquity Strategist Laura.Wang@morganstanley.com +852 2848-6853 Morgan Stanley appreciates your support in the 2024 Institutional Investor All-Asia Research Team Survey. Request your ballot here. Exhibit 1 : MS A-share Sentiment Indicator (MSASI): 36% (weighted), down by 4ppt vs. January 315002000250030003500400045005000550060000%10%20%30%40%50%60%70%80%90%100%Jan-14Jun-14Nov-14Apr-15Sep-15Feb-16Jul-16Dec-16May-17Oct-17Mar-18Aug-18Jan-19Jun-19Nov-19Apr-20Sep-20Feb-21Jul-21Dec-21May-22Oct-22Mar-23Aug-23Jan-24MSASI (Simple)MSASI (Weighted)MSASI (Simple) CurrentMSASI (Weighted) CurrentCSI300 (RHS)75%20%=36%24% Source: CEIC, Bloomberg, Wind, RIMES, Morgan Stanley Research. Data as of January 10, 2024. Exhibit 2 : MSASI trajectory since January 1, 20192,8003,0003,2003,4003,6003,8004,0004,2004,4004,6004,8005,0005,2005,4005,6005,8006,0000%10%20%30%40%50%60%70%80%90%100%Dec-18Feb-19Apr-19Jun-19Aug-19Oct-19Dec-19Feb-20Apr-20Jun-20Aug-20Oct-20Dec-20Feb-21Apr-21Jun-21Aug-21Oct-21Dec-21Feb-22Apr-22Jun-22Aug-22Oct-22Dec-22Feb-23Apr-23Jun-23Aug-23Oct-23Dec-23MSASI (Simple)MSASI (Weighted)MSASI (Simple) CurrentMSASI (Weighted) CurrentCSI 300 (RHS)24%36%MSASI was launched on 11 March, 2019 Source: CEIC, Bloomberg, Wind, RIMES, Morgan Stanley Research. Data as of January 10, 2024.The latest onshore asset management firm bankruptcy, downward pressure on earnings estimates, and potential near-term policy vacuum are likely to deter sentiment recovery. Focus on alpha-generating opportunities. Monitor signs of property market stabilization and waning deflationary pressure.A-share investor sentiment declined vs. the prior week: Weighted and simple MSASIs decreased 4ppt and 5ppt, to 36% and 24%, respectively. Compared to the prior nine-day cycle (December 21-January 3), average daily turnover (ADT) for ChiNext and A-shares during January 4-January 10 decreased 14% and 8%, respectively, while average daily turnover for Northbound increased 2%. RSI-30D decreased 13ppt during the same period. Consensus earnings estimate revision breadth remained in negative territory, but the downward momentum has slowed since the week of November 22.Northbound net outflows totaled US$782mn during January 4-10, largely continuing the outflow trend since August 2023, breaking the inflow trend in the past two weeks: Northbound MTD total net outflows reached US$1.3bn, while Southbound received small inflows of US$110mn during January 4-10, totaling MTD net inflows at US$1.5bn.Market sentiment likely to remain lackluster if policy vacuum persists while market-disruptive events take place and downward pressure on earnings estimates arises: Service consumption remained stable during the New Year’s Day holiday. Domestic tourist volume reached 109% of 2019's level, while revenue reached 106% of 2019's level – this kept average spending largely stable at 97% of 20...
