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Morgan maintains "overweight" in China

  Morgan Stanley said MSCI China presents the
biggest upside to its base case index targets for 2018 compared to other major equity
indices that it covers.
  The research house said that China's earnings estimate revision trend is favorable 
relative to EM overall, though this has slowed more recently.
  Morgan remains positive on the macro side and is not too concerned about over-tightening
or inflation overshoot at this point. It has recently revised its USDCNY exchange rate 
forecast from 6.70 to 6.25 by 2018 year-end.
  The immediate translational impact on earnings is positive as MSCI China is denominated
in USD while the underlying earnings are mostly achieved in RMB.
  Morgan thinks that export-oriented businesses may face negative impact from stronger 
CNY; however, raw material costs and financing costs could improve for companies in the
Materials, Transportation and Real Estate sectors, with the net impact neutral to slightly
positive. It prefers Banks and Insurance, as well as Energy in view of Morgan Stanley's
forecast for rising oil prices.

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