Morgan Stanley released a research report deciding to raise its Chinese capital market index targets given structural improvements such as ROEs, recent corporate earnings and a partial moderation in geopolitical tensions, and predicting a stronger RMB exchange rate. Investors' current underweight positions is also favorable to the market. However, ongoing macro deflation challenges lead the broker to keep rating at Equalweight on the Chinese market, with a preference for China concept stocks' H shares over A shares.Related NewsMacquarie Recommends Buying BABA-W on Dips; Rating Reiterated as OutperformMorgan Stanley raised its 'base case' forecast for the HSI to 24,500 by mid-2026, equivalent to a projected PE ratio of 10.6x by June 2026, with 2026 stock earnings growth expected at 5% under top-down approach.