Tesla (TSLA) +2% Tesla shares bounced after a rough Monday, despite being down 36% in Q1 — the worst Q1 in company history. Investors are now eyeing its Q1 delivery report due Wednesday, with Street estimates hovering around 380,000 units . Analysts have been revising expectations lower amid backlash over Elon Musk’s role in Trump’s administration. Chinese EV Makers Up XPeng (XPEV) +1.6% : Delivered 33,205 vehicles in March — its fifth straight 30k+ month. NIO (NIO) +1.6% and Li Auto (LI) +1.4% also gained on strong March deliveries. Nvidia (NVDA) -0.6% Still under pressure after a 19.3% Q1 drop , its worst since 2022. Investor worries over AI spending, tech valuation, and trade tensions are weighing heavily. Johnson & Johnson (JNJ) -5% Fell after a Texas judge dismissed J&J’s third bankruptcy attempt to settle talc-related lawsuits via Chapter 11. PVH Corp (PVH) +18.9% Shares surged after Q4 earnings beat expectations ...
Key Takeaways:
Positive Outlook for Chinese Stocks: Morgan Stanley has raised its targets for Chinese stocks for the second time in over a month, citing a positive earnings outlook. The MSCI China Index is poised for its first earnings beat in 13 quarters, signaling a potential shift toward stronger performance.
Valuation Boost: Morgan Stanley’s strategists argue that China deserves a valuation similar to MSCI Emerging Markets and has cut its long-standing valuation discount. This is seen as a sign that China's market is emerging from years of underperformance.
Tech Sector Driving Gains: The rally in Chinese tech stocks, driven by optimism surrounding AI developments (particularly DeepSeek's AI model) and President Xi Jinping's positive stance toward tech, is a key factor behind the strong performance. The Hang Seng Tech Index saw a rebound, rising 1.6%.
Strong Earnings Reports: Earnings for top companies, including Tencent and BYD, have either beaten estimates or met expectations, further boosting confidence. The MSCI China Index has reported an 8% net earnings beat in Q4, the best result in over three years.
Target Revisions: Morgan Stanley has raised its year-end targets for major Chinese indices, with more than 8% upside potential for each index. Notable increases include:
Hang Seng Index: 25,800 (up from 24,000)
HSCEI: 9,500 (up from 8,600)
MSCI China Index: 83 (up from 77)
CSI 300 Index: 4,220 (up from 4,200)
Strategic Recommendations: Morgan Stanley recommends being overweight on A-shares in Chinese portfolios and suggests buying high-quality stocks on dips, particularly for non-U.S. investors.
Market Insight: The recent earnings beats and AI optimism have sparked renewed investor interest in China, suggesting that the country’s stock market could be on the verge of a more sustainable recovery. This shift has brought optimism for continued growth, especially in the tech sector, which remains a key focus for global investors.
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