Morgan Stanley Global Macro ForumNavigating Markets amid Rising Geopolitical TensionsFebruary 5, 2024Michael Zezas – Global Head of Fixed Income Research | StrategistSimon Waever – Global Head of EM Sovereign Credit and LatAm Fixed Income Strategy | StrategistMORGAN STANLEY & CO. LLCChetan Ahya – Chief Asia EconomistMORGAN STANLEY ASIA LIMITEDJonathan Garner – Chief Asia and Emerging Market Equity Strategist | Equity StrategistMORGAN STANLEY ASIA (SINGAPORE) PTE.+Martijn Rats – Global Commodities Strategist and Head of European Energy Research | Equity Analyst and Commodities StrategistMORGAN STANLEY & CO. INTERNATIONAL PLC+Jens Eisenschmidt – Chief European Economist MORGAN STANLEY EUROPE S.E.Michael Zezas and Simon Waever are fixed income analysts and are not opining on equity securities. Chetan Ahya and Jens Eisenschmidt are economists and are not opining on any securities. Their views are clearly delineated.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.Morgan Stanley ResearchGlobalFebruary 5, 2024 01:30 PM GMTJonathan GarnerChief Asia and Emerging Market Equity StrategistChetan AhyaChief Asia Economist4Where Are We in the Trade Cycle: Modest Recovery Under WayGlobal new orders to inventory ratio has trended higher though remains subdued versus 2021Modest recovery in regional exportsSource: Haver Analytics, Morgan Stanley ResearchSource: Haver Analytics, Morgan Stanley Research5China Is Emerging as a Deflationary ForceTransmission of deflationary pressures will be more acute in new key energy transition-related sectorsOverinvestment and overcapacity are weighing on China’s export pricesSource: Haver Analytics, Morgan Stanley ResearchSource: WITS trade database, Morgan Stanley Research; *Photosensitive semi-conductor devices, including photo voltaic cells.6Competitive Pressures Will Risk a Broadening of Trade TensionsChina’s excess capacities raise competitive pressures elsewhere and could risk trade tensionsRenewed focus on tariff actions a headwind to China’s exports Source: CEIC, Morgan Stanley ResearchSource: PIIE, Morgan Stanley Research7Damage to Corporate Confidence and Capex Likely to Be Bigger than the Direct Effect of Tariffs on TradeIf tariffs are impos...
