Morgan Stanley’s chief analyst provides an initial read on the “China narrative” amid geopolitical games, and A-shares are expected to further attract global capital.

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China Financial News (Cailian Press) April 8 Report (Reporter Yan Jun) Recently, the 2026 Morgan Stanley China Summit was held in Shenzhen. During the event, Morgan Stanley China’s Chief Economist Xing Ziqiang and China’s Chief Stock Strategy Specialist Wang Ying were interviewed by reporters from China Financial News.

Against the backdrop of steadily intensifying geopolitical conflicts in the Middle East, sharp volatility in global energy markets, and mounting inflation pressures once again, Xing Ziqiang, from a macro perspective, remains optimistic about the resilience of China’s economy—its post-“anti-overhype/anti-inner-competition” reshaping of industries—and expects government measures to boost consumption; Wang Ying, from a strategy perspective, pointed out that the A-share market has a strong ability to withstand volatility, that the high-end manufacturing industrial chain contains abundant opportunities, and that it could further attract inflows of foreign capital.

Both overseas chief executives emphasized that overseas investors are paying increasing attention to China’s economy. Xing Ziqiang said that Shenzhen gathers a large number of technology companies and has a rich industrial chain; this year’s Morgan Stanley China Summit was deliberately held here. It is also the first time that the summit, which had long been held in Hong Kong and Beijing, has moved to Shenzhen, with the goal of enabling overseas clients to conduct on-site assessments of the competitiveness of China’s industrial chains.

“Overseas investors’ interest in China’s assets and China’s stock market is rising in all directions. Overseas investors have seen China’s irreplaceable position in the global high-end manufacturing industrial chain.” Wang Ying said. “This irreplaceability is no longer about price advantages, but about the irreplaceability of products and quality, as well as China enterprises’ absolute advantages in the technology domain.”

Under a “Stable East, Turbulent West” pattern, energy security brings resilience to China’s economy

In its assessment of the current global geopolitical landscape, Xing Ziqiang continued his earlier view that the world is showing a “Stable East, Turbulent West” pattern.

He said that the so-called “Rising East and Falling West” may be too simplistic; “Stable East, Turbulent West” is more fitting. China’s policy continuity and effectiveness stand in sharp contrast to the West’s growing policy uncertainty.

More specifically, the United States faces a range of policy unpredictability—from tariffs and immigration to central bank independence—combined with Europe’s vulnerability amid the energy crisis, making Western economies look unsteady amid turmoil. China has a complete industrial system and policy resolve. In a world marked by instability, this kind of “stability” is itself a scarce asset.

For the Middle East conflict that is continuously intensifying, Xing Ziqiang broke down in detail the transmission mechanism from surging oil prices to the global economy. He laid out three scenarios:

Under a scenario where the conflict cools down quickly, oil prices in 2026 remain at $80–90;

If the parties continue to tug-of-war, oil prices will hover at above $100;

In an extreme case, oil prices could surge to $150–180. Under this scenario, demand would be compressed to the limit, dealing a recession-like blow to the global economy.

Xing Ziqiang expects that, for now, the probability of extreme scenarios emerging is not high. In the future, oil prices may remain at elevated levels of $80–90 for the long term, and possibly even above $100.

Based on this assessment, Xing Ziqiang believes that China has three advantages: first, its green power planning over the past decade-plus (wind, solar, hydro, and nuclear); second, its unique finished petroleum product pricing mechanism; and third, its dependence on imported oil and gas is significantly lower than that of Asian economies such as Japan, South Korea, and India. Even in the face of some imported inflationary pressure, China’s economy still has relatively solid resilience.

“In a non-extreme scenario, this conflict may actually become an opportunity for industrial upgrading in China. China’s domestic economy is not without challenges—boosting consumption is an important one.” Xing Ziqiang said. “The view that ‘as long as you do well on technology and industry, consumption will naturally improve’ doesn’t hold up. China’s current main contradiction is not a shortage of capacity, but the coexistence of overcapacity and insufficient domestic demand. The true ‘anti-overhype/anti-inner-competition’ requires releasing consumption potential through reforms to the social security system.”

He suggested allocating more of state asset returns to the social security fund, especially to close the shortfalls in protection for migrant workers and farmers. Only by increasing the sense of gain for middle- and low-income groups through “redistribution” can consumption be boosted and healthy soil be provided for technological innovation.

A-shares are expected to further attract foreign capital inflows, focusing on tangible assets and high-end manufacturing

Regarding the performance of A-shares this year, Wang Ying first gave a clear view: the 2025 market bull run has already completed valuation repair, and 2026 will be a year of transition from a surge into stable footing.

In this process, in terms of investment strategy, digging for alpha becomes especially important.

“From the start of the year to now, A-shares have appeared weak, but this is partly due to a technical deviation in index construction. In the mainstream indexes, heavyweight firms have too high a weight, which masks the excellent performance of many real-economy industries such as energy, industrials, semiconductors, and so on.” Wang Ying pointed out. “Given that the growth in earnings across the whole market is expected to be in the single-digit range, investors may shift from expecting a broad market rise at the index level to focusing on structural opportunities in individual stocks and sectors.”

“In the three categories of China stock assets—A-shares, Hong Kong-listed shares, and U.S.-listed Chinese concept stocks—around the Chinese New Year this year, we have already advised investors to place most of their funds in the A-share market.” Wang Ying said. As for the source of A-shares’ resilience, she believes that the strong financial capability of the national team funds plays the role of a stabilizer. In addition, compared with Hong Kong-listed shares and Chinese concept stocks, which are constrained by overseas liquidity and sharply fluctuating geopolitical factors, the A-share market has stronger policy independence and certainty. This policy predictability becomes particularly important in a context where geopolitical risk premia are rising.

Wang Ying noted that China’s competitive landscape in high-end manufacturing industrial chains has long moved beyond low-price “anti-overhype/anti-inner-competition.” With a complete industrial chain layout, irreplaceable product advantages, and hardcore technological barriers, it continues to consolidate global competitive advantages. In a multipolar global order, from 2025 to 2030, China’s global export share of high-end processing is expected not only to avoid declining but to rise—estimated to increase by 1 to 2 percentage points. Moreover, combined with the evolution of the current geopolitical situation, this optimistic outlook still has room to be upgraded.

Based on the logic of geopolitical security and independently controllable industrial chains, Wang Ying provided clear sector allocation suggestions:

First, go long on tangible assets, focusing on sectors such as raw materials, industrial goods, semiconductors, energy, as well as power generation, energy storage, and transmission, and mechanical equipment manufacturing related to energy efficiency and safety. Not only do these areas benefit from the reshaping of supply chains amid global geopolitical conflicts, but they also concentrate China’s irreplaceable competitive advantages in global industrial chains.

Second, remain cautious about consumption. Wang Ying clearly stated that before domestic demand truly turns materially stronger, consumption stocks are more defensive rather than aggressive.

Overseas investors such as Middle East sovereign wealth funds are seeking safe havens

Both chiefs said that for global investors, attention to China’s economy and market is increasing.

Xing Ziqiang said that the decision to hold this year’s summit in Shenzhen was to help some overseas clients, large sovereign funds, pension funds, and investors come to Shenzhen, so they can see that the Guangdong-Hong Kong-Macao Greater Bay Area’s industrial system already has an ecosystem environment characterized by integrated upstream and downstream linkages. From cutting-edge embodied intelligence technologies to the energy revolution, green transition, lithium batteries, and new energy vehicles, and even communication networks like 6G, quantum technology, brain-computer integration, and bio-manufacturing—China has the potential to support industrial-chain cooperation and provide solutions.

“Over the past few years, a batch of star companies has emerged in areas such as hard technology, high-end manufacturing, and biotech/pharmaceuticals. Many of these companies have already listed on A-shares. While international investors conduct deep research on these firms, they have significantly increased their interest in investing in the A-share market.” Wang Ying added as well. “As the ‘petrodollar’ cycle gradually loses its luster, sovereign wealth funds in the Middle East and elsewhere have begun seeking diversification in asset allocation. With its steady macro environment and unique and abundant advantages in tangible assets, China is gradually becoming a ‘new frontier’ for global capital.”

Xing Ziqiang said that in the next wave of technological revolutions such as AI and embodied intelligence, China and the United States will form a “G2” pattern. The United States relies on compute power—“big effort produces miracles”—while China relies on forward-looking infrastructure and a massive dividend of engineers, charting a path of algorithm optimization with high cost-effectiveness.

“This kind of differentiation reinforces China’s indispensable position in the global technology landscape. At the same time, China is a stable anchor amid geopolitical storms, but internally it still needs social security reform to activate domestic demand.” Xing Ziqiang said.

(China Financial News Reporter Yan Jun)