Morgan Stanley reported that its proprietary China A-share sentiment indicator moved higher in the fortnight following the Lunar New Year holiday, attributing the lift primarily to increased trading volumes and investor positioning ahead of the National People’s Congress.
Sentiment gauge and moving average
The firm’s weighted MSASI reading rose 14 percentage points from the February 11 cutoff to 59%. The one-month moving average held steady at 67%, signaling a short-term uptick within a still-more-muted monthly backdrop.
Market turnover and leverage metrics
Across markets, daily turnover showed notable expansion during the February 12-25 window. ChiNext daily turnover increased 11% to reach 627 billion yuan. Broader A-share daily turnover climbed 24% to 2.43 trillion yuan over the same period. Equity futures activity saw an even larger jump, up 45% to 414 billion yuan. By contrast, margin transaction balances were unchanged at 2.62 trillion yuan for the measured interval.
Momentum, earnings revisions and flows
The 30-day relative strength index rose by 2% across the cycle. Consensus earnings estimate revision breadth remained in negative territory but showed a marked improvement versus the prior cutoff date, according to the firm. Southbound stock connect flows were net inflows of $3.1 billion during February 12-25, with year-to-date and month-to-date net inflows of $16.5 billion and $4.4 billion, respectively.
Offshore considerations and watchpoints
Morgan Stanley cautioned that offshore China markets are contending with concerns about artificial intelligence-driven disruption and broader competitive pressures. The firm highlighted three items it will be monitoring closely: enhancements in AI capabilities by large-cap platform companies, signs of improved corporate earnings, and stabilization in external markets.
Note on scope - The observations above reflect Morgan Stanley’s sentiment gauge and the market metrics the firm reported for the February 12-25 interval and the February 11 cutoff. The report contrasts short-term improvements in turnover and momentum with lingering negative earnings revision breadth and offshore risk factors.