Really, predicting a 37% return for any major index is outright scandalous — let alone the utterly and contemptible Shanghai index, a denizen for perfidy and wanton chicanery. Nevertheless, the shills over at Morgan Stanley believe the year of the rat will produce a superfluous amount of grandeur for the canine eating men in China.
“The key message of this report is that China can transition to high income status, something few other EMs have achieved,” Morgan Stanley strategists led by Jonathan Garner wrote in a 118-page macro outlook received Tuesday. “It is likely that over the next 10 years MSCI China can keep up its long track record of outperformance of EM.”
“Clearly, there are many aspects of price formation and market regulation in China’s equity markets which continue to look unfamiliar to the global investor,” such as the process for suspending trading and for approving initial price offerings, the analysts wrote.
If China can make the achievement, it is “very likely” the MSCI China gauge will continue a trend that has seen it deliver a U.S. dollar total return compound annual growth rate of 13 percent over the last 15 years, outperforming its broader emerging-market peer by 3 percentage points a year, Morgan Stanley said. That is the difference between a $100 investment becoming $625 or $418, it noted.
There you have it, cognitive dissonance at its finest. Let’s all pretend China isn’t saddled with the very worst debt leverage in the world — beguiled by capital outflows and totally dependent on foreign markets to keep their people employed.If you enjoy the content at iBankCoin, please follow us on Twitter