摩根士丹利-2026亚洲暑期学校：中国股票策略-Asia Summer School 2026：China Equity Strategy-20260531

Morganstanley

RESEARCHFouNDATloN

May31,202610:59PMGMT

InvestorPresentation|AsiaPacific

AsiaSummerSchool2026:ChinaEquityStrategy

MoRGANSTANLEyAsiALimiTEd+

LauraWang

EquityStrategist

Laura.Wang@

+8522848-6853

ChloeLiu

EquityStrategist

Chloe.Liu1@

VickyWu

EquityStrategist

+8522848-5497

Vicky.Wu@

+8523963-3928

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

2

Morganstanley

RESEARCH

FouNDATloN

AsiaSummerSchool2026

Morganstanley

RESEARCH

FouNDATloN

MoRGANSTANLEyREsEARcH3

FactSheet:Multiplelistingandtradingplatformsaroundtheglobe

StructureofChinaequitymarket

ListedChineseequities,bymarket(marketcap)

16,932

4,698

97

A-shareHKlistedChinesestocksUSlistedChinesestocks

(US$bn)

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

ListedChineseequities,bymarket(#ofstocks)

#ofstocks

5,201

1,590

336

6,000

5,000

4,000

3,000

2,000

1,000

0

A-shareHKlistedChinesestocksUSlistedChinesestocks

Onshore

listings

ChinaEquityMarket

Offshore

listings

Beijing

StockExchange

HongKonglistings

USlisted

Others

Mainboard*

ChiNext

Mainboard

STAR

Shanghai

StockExchange

Shenzhen

StockExchange

Source(left):MorganStanleyResearch.*ShenzhenSMEboardhasbeensubsumedunderShenzhenmainboardsinceApril2021.

Source(right):Wind,FactSet,CEIC,SSE,SZSE,HKEX,Bloomberg,MorganStanleyResearch.Dataasofend-April2026.A-sharestockscountShanghaiandShenzhenlistedstocksonly.Onlyexchange-tradedChinesecompanieswithprimarylistingintheUSarecountedunderUS-listedChinesestocks(UStradedmarketcaponly).AHduallistingsandprimary&secondarylistings

arecountedtwicein#ofstocks.Marketcapisnotdoublecounted.

4

Chineseequitiesclaimthesecond-largestaggregatemarketcapglobally

Majorequitymarketsbymarketcap(US$tn)

Nasdaq

US-Listed

HK-Listed

NYSE

SZE

SSE

USChinaEuronextJapan

80

70

60

50

40

30

20

10

-

Source:WorldFederationofExchanges,CEIC,MorganStanleyResearch.Dataasof2026March.

MoRGANSTANLEyREsEARcH5

Chineseequitiesrepresent21%and3.5%,respectively,inMSCIEMandMSCIACWI

China’sindexweightwithinMSCIACWI,breakdownbyA-sharesandnon-A

China’sindexweightwithinMSCIEM,breakdown

byA-sharesandnon-A

A-sharewithinMSCIACWI

7Chinanon-AwithinMSCIACWI

6

5

4

3

2

1

0

A-sharewithinMSCIEM

Chinanon-AwithinMSCIEM

45

40

35

30

25

20

15

10

5

0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

Source:FactSet,MorganStanleyResearch.DataasofMay26,2026.

6

HowtoevaluateChineseequities’performanceinaglobalcontext–

Weremainequal-weightonMSCIChinawithinourglobalEM/APxJframework

160

150

140

130

120

110

100

90

80

70

OW

MSCIChinaRelativetoEM(indextotalreturninUSD)

OW

OW

OW

OW

UW

EW

EW

EW

EW

EW

EW

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

Dec-25

Jun-26

Source:MSCI,FactSet,Datastream,MorganStanleyResearch.DataasofMay26,2026.Pastperformanceisnoguaranteeoffutureresults.

MoRGANSTANLEyREsEARcH7

MorganStanleyFrameworkofChineseEquityInvestmentStrategies

8

IndexTargets:MorganStanleyChinaEquityStrategyResearchProtocol

-Officialpricetargetrevisittwiceperyear

oNewYearOutlook–usuallytakesplaceinNovember

oMid-yearOutlook–usuallytakesplaceinMay

-Pricetargetsettingprocess

oEarningsoutlook

oValuationforecast

oUpside/downsidevs.currentmarketindexlevel

-Examples

oChinaEquityStrategyMid-yearOutlook|AsiaPacific:ForgingNewHorizons(13May2026)

oInvestorPresentation:ChinaEquityStrategy:ForgingNewHorizons(17May2026)

-Pricetargetchangesoutsidetheregularoutlookpublicationcycle

oWhenweexpectsignificantchangesincourseformajormarket-influencingfactors

Source:MorganStanleyResearch.

MoRGANSTANLEyREsEARcH9

AssessingMorganStanley’sChinaframework–Weseebrighterspotsinearningsandcurrency

Covid-19

2020Post2018

2H2021

Dec-22

Aug-23

Feb-25

2025

YearEnd

2026

MidYear

1

Economic/EarningsEstimates

x

Neutral

xx

xx

x

x

Neutral

2

Valuation

x

x

Neutral

Neutral

Neutral

Neutral

3

Liquidity

x

x

x

Neutral

4

PolicyCycle

x

x

5

USDCNYtrend

x

Neutral

x

xx

x

6

US/China&geopoliticaltension

x

Neutral/

Slightly

negative

Neutral/

Slightly

negative

Neutral/

Slightly

negative

Neutral/

Slightly

negative

x

Interim

truce

Interim

truce

7

Regulatory/Policypriority

x

Downgrade

Neutral

Upgrade

x

Downgrade

Upgrade

xx

Downgrade

Upgrade

PTincrease

PTincrease

Source:MorganStanleyResearch.Tickindicatesourviewonthefactorisimproving,whilexindicatesthefactorisdeteriorating,andxxindicatesagreaterlevelofdeterioration.

10

Consensusearningsestimates–Weexpectfurtherdownwardrevisionsfor2026EPSbutatdeceleratingspeed

MSEPSbasecaseforecastsforCSI300

atDec-25andDec-26

MSEPSbasecaseforecastsforMSCIChina

atDec-25andDec-26

450

400

350

300

250

200

MSEPSForecasts

150

2015201620172018201920202021202220232024202520262027

201820192020202120222023202420252026202712mfwd

MS

BullDec27:

361

MS

BaseDec27:

347

MS

BearDec27:

319

CNY500

HKD

11

10

9MS

BullDec27:

7.4

8MS

BaseDec27:

7.2

7MS

BearDec27:

6.46

5

MSEPSForecasts

4

20142015201620172018201920202021202220232024202520262027

2018——20192020——2021——2022——2023——2024——2025——2026202712mfwd

Source:IBES,Datastream,MorganStanleyResearch.WeeklydataasofMay21,2026.Source:IBES,Datastream,MorganStanleyResearch.WeeklydataasofMay21,2026.

MoRGANSTANLEyREsEARcH11

Downwardearningsestimatesrevisionpressuretopeakoutin2Qandthenimprove

HistoryofChineseequitymarketquarterlyearningssurprises,bynumberofcompanies

-14%

-16%-19%-21%-18%-17%

-20%-22%-22%-24%-20%

-24%-25%-26%-24%-27-4%-24%

-29%-30%

20%

10%

0%

-10%-20%-30%-40%

-50%

-5%-9%

-11%

-14%-13%

-20%

-23%

0%

-7%

-23%

MSCIChinaMSCIChinaAOnshore

-7%

-9%-10%-12%

-15%

-19%

17%

12%

9%

-3%

-14%

12%

9%

8%8%

10%

3%

-33%

-38%

-20%

-25%

-6%

-13%

-2%-4%-3%

-34%-33%

5%

3%

-36%

-30%

-14%

-9%

2Q2018

3Q2018

4Q2018

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

2Q2020

3Q2020

4Q2020

1Q2021

2Q2021

3Q2021

4Q2021

1Q2022

2Q2022

3Q2022

4Q2022

1Q2023

2Q2023

3Q2023

4Q2023

1Q2024

2Q2024

3Q2024

4Q2024

1Q2025

2Q2025

3Q2025

4Q2025

1Q2026

Source:MSCI,Bloomberg,RIMES,FactSet,MorganStanleyResearch.DataasofMay25,2026.

12-monthforwardconsensusearningsestimate

revisionbreadth(ERB,3mma)

30%

20%

10%

0%

-10%

-20%

-30%

-40%

2017201820192020202120222023202420252026

S&P500MSCIEuropeMSCIEMMSCIJapanChina

Source:RIMES,MorganStanleyResearch.DataasofApril2026.

12

MSCIChinaindexlevelearningsgrowthforecasts,byindustry,basedonMSbottom-upestimates

MSCIChinaSectors

EPSGrowthDecomposition

Index

weight*

2025E

2026E

2027E

ConsumerDiscretionary

24%

(33%)

16%

41%

ConsumerStaples

3%

(0%)

25%

10%

InformationTechnology

7%

18%

1%

33%

HealthCare

4%

44%

2%

17%

CommunicationServices

18%

9%

8%

14%

Utilities

1%

2%

(3%)

5%

RealEstate

1%

(42%)

31%

15%

Financials

18%

8%

(4%)

7%

Energy

3%

(12%)

29%

9%

Materials

4%

31%

78%

5%

Industrials

4%

0%

7%

13%

MSbottomupforecastsofEPSgrowthforMSCIChina

(3%)

7%

16%

MStopdownforecastsofEPSgrowthforMSCIChina

5%

7%

10%

ConsensusEPSgrowthforMSCIChina

(2%)

14%

15%

Source:FactSet,Datastream,ModelWare,MorganStanleyResearch.Note:DataasofMay28,2026.*OnlyindexweightofMorganStanleyResearch-coveredstocksthatareMSCIChinaconstituentsarecounted.Henceitmaynotsumto100%duetocoverage.

MoRGANSTANLEyREsEARcH13

WeseestrongerexportsgrowthbenefitingfromglobalAI/Energycapexsupercycle;moreclarityneedstobeseentocallasustainablereflation

ExportsdrivinggrowthamidAIandenergycapex

supercycle

8

7

6

5

4

3

2

1

0

-1

-2

ChinaRealGDPGrowthbyExpenditure,%

5.05.04.84.7

1.5

0.7

0.2

1.3

1.3

1.8

0.8

0.8

1.6

1.6

0.7

1.0

1.5

1.0

1.5

2.1

2019202020212022202320242025E2026E2027E

NetExportsGFCFGovernmentConsumption

HouseholdConsumptionChangesinInventories——RealGDP

Inflationisrising,butreflationisnarrow

YoY%

MSe

CPIPPIGDPDeflator

9

7

5

3

1

-1

-3

Jun-11

Dec-11

Jun-12

Dec-12

Jun-13

Dec-13

Jun-14

Dec-14

Jun-15

Dec-15

Jun-16

Dec-16

Jun-17

Dec-17

Jun-18

Dec-18

Jun-19

Dec-19

Jun-20

Dec-20

Jun-21

Dec-21

Jun-22

Dec-22

Jun-23

Dec-23

Jun-24

Dec-24

Jun-25

Dec-25

Jun-26

Dec-26

Jun-27

Dec-27

-5

Source:CEIC,MorganStanleyResearchestimates.

14

Policytostayoncruisecontrolgivenresilientorganicgrowthandexportstrength

Augmentedfiscaldeficitwilllikelystayflatthisyear,

withnosupplementarybudgetin2H

Exportresiliencereducesurgencyforadditional

countercyclicaleasing

AugmentedFiscalBalance,%ofGDP

2%

-3%

-8%

-11.1%-11.7%-11.7%

-12.2%-15.4%

-13%

-18%

20222023202420252026E

BudgetBalanceTransferfromGovt.FundtoBudgetBalance

STBorPBoCProfitTransferLocalGovt.SpecialBondsforNewProjects

SocialSecurityFundLGFVFunding

PolicyBankFinanialBondsPSLforShartytownRenovation

NetLandSalesLocalDebtSwap

SpecialTreasuryBondsforReplenishingBankCapitalAugmentedFiscalBalance

YoY%

50

40

30

20

10

0

-10

-20

ExportsInfrastructureFAI

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Source:CEIC,MorganStanleyResearchestimates.

MoRGANSTANLEyREsEARcH15

MSCIChinatradesat10.9x12-monthforwardP/E,at~10%discountvs.MSCIEM

%toMSCIEM(RHS)

+1SD

-1SD

MSCIEMFwdP/E

MSCIChinaFwdP/E

5yraverageofMSCIChinaFwdP/EMSCIChinaP/Epremium/(discount)

20.0x

18.0x

16.0x

14.0x

12.0x

10.0x

8.0x

6.0x

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Jan-14

Jul-14

Jan-15

Jul-15

Jan-16

Jul-16

Jan-17

Jul-17

Jan-18

Jul-18

Jan-19

Jul-19

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24

Jan-25

Jul-25

Jan-26

Source:Datastream,MSCI,MorganStanleyResearch.DataasofMay27,2026.

16

MSCIChinastilltradesatdiscountstoothermajorglobalequitymarkets

8x

6x

1996199820002002200420062008201020122014201620182020202220242026

MSCIChinaTOPIXMSCIEMS&P500MSCIEurope

28x

26x

24x

22x

20x

18x

16x

14x

12x

10x

20.9x

16.7x

14.5x

12.1x10.9x

Source:IBES,MSCI,FactSet,MorganStanleyResearch.Note:DataasofMay27,2026.

MoRGANSTANLEyREsEARcH17

MSCIChinavs.USDCNY–Weexpectmildappreciationtocontinue;positiveforequities

MSCIChina

CNYperUSD(RHS)

MSCNYForecast(RHS)

140

120

100

80

60

40

20

0

7.6

7.4

7.2

7.0

6.8

6.6

6.4

6.2

6.0

6.786.72

6.75

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Dec-21

Dec-22

Dec-23

Dec-24

Dec-25

Dec-26

Source:CEIC,MorganStanleyResearch.DataasofMay27,2026.MSChinaEconomicsteamexpectsUSDCNYtoreach6.78,6.72and6.75byend-2Q26,end-3Q26andend-2026.

18

Long-termoutlookforUS-Chinarelationshipremainsinthe“CompetitiveConfrontation”state,asbasedontheMSframeworkofamultipolarworld

LowDefen

Strate

CompetitiveConfrontation[Current]

Offense

-Incentivestobuildoutinnovationpipelineinfoundationalscienceandemergingindustries

-Federalinvestmentininfrastructureand'new

economy'partlyfundedbyprogressivetaxreforms

Defense

-Continuationandexpansionofnon-tariffbarrierarrangementsandpoliciestoprotecttechnology

-Enacts'BuyAmerican'andsupply-chainsecurityfocusedlegislationandexecutiveorders

FortressAmerica

Offense

-Congressionalgridlockhampersgovernment

investmentininfrastructureand'neweconomy'sectors

Defense

-Continuationoftradetariffs,withpotentialincreaseinfrictionswithothertradepartners

-Securityandideologicalconcernsseebroaderuseofnon-tariffbarriersandexportandinvestmentcontrols

ConstructiveCompetition

Offense

-Federalinvestmentininfrastructureand'new

economy,'partlyfundedbyprogressivetaxreforms

-Enacts'BuyAmerican'andsupply-chainsecurityfocusedlegislationandexecutiveorders

Defense

-USfocusestradebarriersonacutesecurityrisks,reducingtariffsinpursuitoftradeandcooperativegoals

PassiveRe-engagement

Offense

-Congressionalgridlockhampersgovernmentinvestmentininfrastructureand'neweconomy'sectors

Defense

-USpursuesparallelrollbackoftariffswithChinainperceivedpragmaticself-interest

-Administrationprovesreluctanttoincureconomiccostsofnon-tariffbarrierswithoutclearend-goal

HighDefenseStrategy

HighOffenseStrategy

LowOffenseStrategy

segy

Source:MorganStanleyResearch.

MoRGANSTANLEyREsEARcH19

US-Chinarelationship–Weexpectthetrucetocontinuewithselectedrelaxationretradeandtechrestrictions

Summitcancelledorpuntedaheadofproposedmeeting

Triggers:

•EscalationinUS-Iranconflict(andChina’spossiblemoreexplicitroleintheconflict).

•DeteriorationinUS-Chinarelations.

Outcome:

•Existingtradetensionsandtechrestrictionspersistorintensify.

•Potentialplannedconcessions(e.g.expandedChinesepurchaseofUSagriculturalproductsorlimitedtariffrelief)wouldlikelybe

deferred.

•Additional(andlikelytargeted)exportcontrolsorinvestment

restrictionscouldemerge

Limitedtruce/cooperationwithsymbolicdeliverables

oneitherside

Outcome:

•ChinacouldagreetoincrementalpurchasesofUScommodities(e.g.soybeans,aircraftandenergy),signalgreateropennesstonon-

advancedUSchips,easeregulatorypressureoncertainUS

companiesoperatinglocallyandoffermoreclarityonfutureexports

ofcriticalmaterials.

•USmightoffermodesttariffadjustments,exemptionsordelaysin

additionaltraderestrictions.

Overall,incrementalcommitmentsratherthanstructuralchange

Moredurablestabilizationofthebilateralagreement

Outcome:

•Large-scaleChinesecommitmentstopurchasingUSagriculturalandenergyproducts.

•Formaltariffrollbacks.

•Reciprocalmarketaccesscommitments,andclearerframeworksaddressinginvestmentscreeningandsupply-chainsecurity.

•Possiblyextendedtofentanylcooperationorfinancialmarketaccess.

•Advancedchiprestrictionsremain,butbothsidesestablishclearerlicensingforlower-endchipsandcommercialsemiequipment.

•StableandpredictablerareearthexportsfromChina

Littlechangetotheexistingrelationship,potentialescalation

followingthesummit

Outcome:

•Vaguestatementsemphasizingdialoguewithoutsubstance.

•Tariffsandexportcontrolswouldremainlargelyunchanged.

•Renewedtensionsofpolicyescalationmightfollow,particularlyifdomesticpoliticalpressuresorgeopoliticaldevelopmentsbecome

alargerfocusoftheadministrationvs.thesenegotiations.

Trump-XiSummitScenariosOurbasecase

Source:MorganStanleyResearch.

20

USinvestorrepresentationintotalChineseequityownershiphascomedownovertheyears

MSCIChinaconstituentforeignownership

in2018

US

Europe

Other

countries/territories

China(inc.HK&Macau)

VirginIslandsUndisclosed

17.4%

13.7%

3.4%24.9%4.1%

36.5%

Source:Refinitiv,FactSet,MorganStanleyResearch.Dataasofend-2018.

MSCIChinaconstituentforeignownership

in2025

US

Europe

Other

countries/territories

China(inc.HK&Macau)

VirginIslandsUndisclosed

11.0%

25.8%

50.0%

10.2%

1.9%

1.0%

Source:Refinitiv,FactSet,MorganStanleyResearch.Dataasofend-2025.

MoRGANSTANLEyREsEARcH21

ActiveweightsofChina/HKequities,byregionalfundcategoryandmanagerdomicile–Long-onlypositionsinChinahaveremainedheavilyunderweight,suggestingroomtoadd

Source:FactSet,MorningStar,EPFR,MorganStanleyResearch.DataasofApril30,2026,mostfundshavediscloseddatauptoMarch31.Notes:funduniverseofeachcategoryisformedbythelargest30activemutualfundsunderMorningStarregionalcategory.Fundsunder"non-USManagers"aremostlydomiciledinEurope.WeexcludeESGfunds,incomefunds,andsystematicfunds.AllthecoveredfundsarebenchmarkingtoeitherMSCIorFTSEstandardregionalindicesofAllCountryWorld,AsiaexJapan,orEmergingMarkets.

Morganstanley

RESEARCH

FouNDATloN

EMFundManagers’RelativeMarketAllocationvs.History–

22

EMFundsareOWonBrazilandKorea,whileUWonChina,IndiaandTaiwan

Source:EPFRGlobal,MorganStanleyResearch.Note:DataasofMarch31,2026.*JapanandEMfundweightinglobalfunds.Note:Monthlydataisavailableonthe24thofthenextmonth.

Morganstanley

RESEARCH

FouNDATloN

Foreignmutualfundflowsstrengthenedfurtherin2026,YTDinflowsreaching

MoRGANSTANLEyREsEARcH23

80%offull-year2025level,thoughstilllargelydrivenbypassivefunds

Dailycumulativefundflows–Foreignactivefunds

(US$bn)

Cum.net

fundflows-USActiveFund

Cum.net

fundflows-EUActiveFund

——

Cum.net

fundflows-ForeignActiveFund

10

0

-10

-20

-30

-40

-50

-60

Oct-22

Dec-22

Feb-23

Apr-23

Jun-23

Aug-23

Oct-23

Dec-23

Feb-24

Apr-24

Jun-24

Aug-24

Oct-24

Dec-24

Feb-25

Apr-25

Jun-25

Aug-25

Oct-25

Dec-25

Feb-26

Apr-26

-70

Dailynetfundflows–Foreignactivefunds

(US$mn)Dailynetfundflows-ForeignActiveFund

800

600

400

200

0

-200

-400

-600

-800

-1,000

-1,200

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

Jan-25

Feb-25

Mar-25

Apr-25

May-25

Jun-25

Jul-25

Aug-25

Sep-25

Oct-25

Nov-25

Dec-25

Jan-26

Feb-26

Mar-26

Apr-26

May-26

Source:EPFR,MorganStanleyResearch;DataasofMay27,2026.

Dailycumulativefundflows–Foreignpassivefunds

(US$

70

bn)

Cum.net

fundflows-USPassiveFund

Cum.net

fundflows-EUPassiveFund

——

Cum.net

fundflows-ForeignPassiveFund

60

50

40

30

20

10

0

Oct-22

Dec-22

Feb-23

Apr-23

Jun-23

Aug-23

Oct-23

Dec-23

Feb-24

Apr-24

Jun-24

Aug-24

Oct-24

Dec-24

Feb-25

Apr-25

Jun-25

Aug-25

Oct-25

Dec-25

Feb-26

Apr-26

-10

Dailynetfundflows–Foreignpassivefunds

Jan-24

Feb-24

Mar-24

Apr-24

May-24

Jun-24

Jul-24

Aug-24

Sep-24

Oct-24

Nov-24

Dec-24

Jan-25

Feb-25

Mar-25

Apr-25

May-25

Jun-25

Jul-25

Aug-25

Sep-25

Oct-25

Nov-25

Dec-25

Jan-26

Feb-26

Mar-26

Apr-26

May-26

(US$mn)Dailynetfundflows-ForeignPassiveFund

3,500

3,000

2,500

2,000

1,500

1,000

500

0

-500

-1,000

-1,500

-2,000

Morganstanley

RESEARCH

FouNDATloN

Southboundinflowsstillpositive,butcoolingfrom2025’srecordpace,witha

24

skewtowardMedia&Entertainment,IT,andConsumerDiscretionary

AnnualSouthboundnetinflows

Southboundnetinflow,bysector

Source:CEIC,MorganStanleyResearch.Note:DataasofMay27,2026.Source:Wind,FactSet,MorganStanleyResearch.DataasofApril29,2026.

Morganstanley

RESEARCH

FouNDATloN

MoRGANSTANLEyREsEARcH25

MorganStanleyFrameworkofChineseEquityInvestmentStrategies

26

IndexperformanceandSharpeRatio(MSCIChina,CSI300,MSCIEM,S&P500)

–CSI300demonstratingsuperiorrisk-adjustedreturnsin2025and2026YTD

TotalreturninUSD

2026YTD

2025

Standard

Sharperatio(Annualized)

deviation(Annualized)

Annualized

return

2026YTD

Standard

deviation

(Annualized)

Sharperatio

(Annualized)

24Sep2024-

Now

2025

MSCIChina

30%

27%

-10%

24%

0.95

-24%

20%

-1.41

CSI300

59%

23%

9%

15%

1.44

28%

15%

1.74

HangSeng