Is Spring Coming for Consumer Stocks? Morgan Stanley Analyzes China's Policy Impact on Stocks and Investment Strategies

Morgan Stanley released a report stating that the gradual implementation of current fiscal and reform policies aligns with the policy shift framework that the bank has been judging since mid-September.The bank pointed out that there has been a change in policy mentality,with decision-makers beginning to actively seek solutions to problems.Among these,the scale and implementation details of the debt swap plan are the focus of market attention.Considering the press conference pointed out that about 3.4 trillion yuan of swap quotas have been arranged since 2022,it is reasonable to speculate that future one-time expansion of quotas will significantly exceed this figure.Morgan Stanley estimates that this scale may reach around 6 trillion yuan and will be gradually used in the next few years.Such a scale helps to more evenly share the burden of local debt,enabling local governments,the financial system,and creditors to more fairly bear the pressure of deleveraging,thereby achieving the so-called "beautiful deleveraging."

Morgan Stanley pointed out that to achieve China's reflation,it is necessary to restart debt,stimulate the economy,especially consumption,and reform confidence.After the Ministry of Finance's meeting,if the promised policies can be implemented,progress can be seen in the next six months in terms of restructuring debt and protecting the confidence of entrepreneurs.The bank is willing to give a 60% to 80% progress in restructuring debt and a 50% to 60% progress in protecting the confidence of entrepreneurs.Although there are no direct policies to stimulate consumption at present,and even the issue of quickly solving problems through fiscal stimulus is still pending,the overall progress of China's reflation path has obviously accelerated compared to a few months ago.

Financial policy has played an important role in the reflation battle.On September 24,three financial departments injected a strong heart pill into the market confidence,indicating that financial policy is actively supporting economic growth and reflation.If other departments can also learn this way of communicating with the market,making China's reflation intentions more clearly conveyed,it will help to form a joint force to promote economic growth.Although there may be some bumps and coordination issues in the early stages of the reflation battle,it is believed that these difficulties will gradually be overcome as policies are gradually implemented and the market gradually adapts.

Regarding the future trend of the overall market,Morgan Stanley believes that the overall market sentiment and capital flow should still be a trend towards stability,and there are more tools to look forward to on the fiscal side.These all indicate the future policy space and policy focus.The next market is more likely to gradually tend to the stability of sentiment and capital.However,Morgan Stanley also emphasized that this capital is not a wide net,but wants to avoid some downside risks in the short term,so it focuses on the opportunities of individual stocks with stable profit expectations and high dividends.

The bank said that the impact of China's reflation process on consumer stocks can be focused on at present.In the previous market,the market's expectations for China's reflation process have driven the rise of consumer-related stocks.These stocks not only include consumer stocks in the narrow sense but also include industries related to reflation and big consumption in the broad sense,such as large-cap internet,travel,and service industries.Although the specific details of the policy have not been fully introduced at present,leading to a certain回调 and increased volatility in the market,this does not mean that the rebound of consumer stocks has ended.On the contrary,as policies are gradually implemented and market expectations gradually become clear,consumer stocks may continue to rebound.

Therefore,Morgan Stanley suggests that investors should pay attention to individual stocks with relatively low valuations and guaranteed quality in consumer stocks while focusing on policy dynamics and market trends.Especially for individual stocks that have clearly announced stock buyback or dividend plans this year or recently,these stocks are more likely to perform well in future market trends.

At the same time,Morgan Stanley believes that in the next few weeks,the risks from the outside world are no less than the uncertainties in domestic policy.Specifically,it is necessary to closely monitor the complex situation of geopolitics,which may have a profound impact on the global market.The interest rate decision of the United States is also an aspect that needs high attention,and it will have a significant impact on global capital flows and financial markets.

In this process,the trend of the US dollar will also have a series of impacts on the attractiveness of non-US dollar-denominated assets.As the world's main reserve currency,the fluctuations in the trend of the US dollar will directly affect the exchange rates of other currencies and asset prices.Therefore,it is necessary to closely monitor the trend of the US dollar and its potential impact on the global market and Chinese market assets.