Morgan Stanley still likes these Chinese stocks despite a country downgrade

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Uncertainty is rising for the giant emerging market class of Chinese stocks.

Morgan Stanley has decided to take a break, downgrading MSCI China to equal weight while recommending a few consumer and industrial names. That contrasts with a growing number of calls to buy the dip . "Lack of quick follow-through of actionable easing measures could lead to a retreat from the early recovery in sentiment," Morgan Stanley equity strategists Laura Wang and Fran Chen said in an Aug. 2 note. Chinese stocks have rallied modestly over the last two weeks.

line YTD performance for the WisdomTree Trust China ex State Owned Enterprises ETF For WisdomTree's clients investing in China, many are "making a long-term contrarian trade, in the sense [that] in the longer term China is still going to be quite formidable in terms of broad technological progress," Ren said. "Many of the clients still believe China can grow above 4% in the next decade." Second-quarter gross domestic product missed expectations but still posted 6.

 

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