Morgan Stanley-China Equity Strategy Macro Webcast Chinas 3D Journey Ch...-104244581.pdf

MChinanEiqiEauthiySrChinaEquityStrategyMacroWebcast:China's3DJourney:China'sROERoadmap:Challenges&OpportunitiesMacroWebost:WChioWni'ibt3DChinhahEqJuyROEWeOdmOplRgOEEEEEEEEEEEEEEEEEEEEEEEEnmydm&TmflSwAdlmfgOmfLpE&(AwEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEED)/PWP).)19)/2EEEEEEEEEEEEEEEEEEEEunhEatySEratueJuyROEWeOdmOplRgOEEEEEEEEEEEEEEEEEEEEEEEE0dmf&68pfSwAdlmfgOmfLpE&(AwEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEED)/PWP).)1Z42/EEEEEEEEEEEEEEEEEEEEsait:rnW:ost:WJuyROEWeOdmOplRgOEEEEEEEEEEEEEEEEEEEEEEEE6mO8pdRfp&68pfSwAdlmfgOmfLpE&(AwEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEED)/PW2H921.4)9EEEEEEEEEEEEEEEEEEEEstnWao'3cniDoJirai:eDuoostnWayRoOEodmcrW:DuostnWayRopl'opmag&aTuostaff:We:RoSolTTmricWnin:RowALoJ:ToA(AO)MacroWebost:WCathWoCWhttihWbaWCaWn'h3thhWD3bJWuayRo3thWuaOtctCW3WMacroWebost:WEthtocuJdWmhWoWcth'sbpW3OthbachWhJa'sCWntWoDoctWbJobWbJtWl3cyWyo:WJoOtWoWuals3ubWalW3btcthbWbJobWua'sCWolltubWbJtWangtub3O3b:WalWMacroWebost:WEthtocuJdW&OthbachWhJa'sCWuah3CtcWMacroWebost:WEthtocuJWohWas:WoWh3rstWloubacW3Wyoi3rWbJt3cW3OthbytbWCtu3h3adMacrooWebsrt:csChCtosCaroirasn:crC'3acsosriCbtWabDc:bJrc:h:crsarsn:ruCbtWabDc:ry:tsCaJrWatos:irosrsn:r:irahrsnCbrc:3acsRTfWmos:hbhWtyRsa:tCWn:WaSwdedWoll3s3obthWoctWabWctr3hbtctCWD3bJWA&LEmpWyo:WabWntWohhau3obtCWRtchahWalWbJtWytyntcWoCWyo:WabWntWh'ngtubWbaWA&LEmWcthbc3ub3ahWaWuayy'3uob3ahWD3bJWoWh'ngtubWuayRo:pWR'ns3uWoRRtocouthWoCWbcoC3rWhtu'c3b3thWJtsCWn:WoWcthtocuJWoos:hbWouua'bdWOctober8,202309:00PMGMTMAsiaPacificInsightMofthislineofthislineAfter18yearsofsuperiorROEdelivery,MSCIChina'sROEhasbeensurpassedbyMSCIEMsince3Q21,amidslowermacroandreturning3DchallengesSource:Datastream,FactSet,MorganStanleyResearch;Note:Historicaldataaremonthlyasofend-September2023.-5%0%5%10%15%20%Jan-75Jan-77Jan-79Jan-81Jan-83Jan-85Jan-87Jan-89Jan-91Jan-93Jan-95Jan-97Jan-99Jan-01Jan-03Jan-05Jan-07Jan-09Jan-11Jan-13Jan-15Jan-17Jan-19Jan-21Jan-23Jan-25Jan-27Jan-29Jan-31Jan-33MSCIChinaMSCIWorldMSCIJapanMSCIEMPostJapanDeflation-era,Avg4.2%JapanentersdeflationeraJapanBoom-era,Avg9.6%OverCapacity+PPIDeflationLowinflation+MacroHeadwindAvg11.9%JapanReflation&GovernanceImprovementChinaBoom-era,Avg15.1%long-term(2003-2023)avgROEMSCIChina:13.8%MSCIWorld:12.6%MSCIEM:13.1%MSCIJapan:7.4%MAsiaPacificInsightAsiaPcfIPnghctgngialsofthislineofthislineSource:Modelware,FactSet,MorganStanleyResearchforecasts;Note:WepreviouslypublishedourMSCIChina'sROEforecastsinour2023mid-yearoutlook.WelowerMSCIChinaROEfor2023eand2024eto9.8%and10.5%,respectively,duetoongoingpressureonearningsaswellasstructuralconcerns10.9%11.6%9.8%10.5%8.5%9.0%9.5%10.0%10.5%11.0%11.5%12.0%2023E2024EOldMSCIChinaROEforecastsCurrentMSCIChinaROEforecastsMAsiaPacificInsightiofthislineofthislineSource:Datastream,FactSet,MorganStanleyResearchforecasts;Note;Historicaldataaremonthlyasofend-August2023.MSCIChinaROElong-termtrend(2003-30bull,baseandbearcaseforecasts):Weseewiderforkedpathahead15%7%