Summary of Key Points from the Conference Call Industry Overview - **Industry**: A-Shares Market in China - **Date**: December 11, 2025 Core Insights - **Market Sentiment**: Increased sentiment in the A-share market due to higher turnover, with a cautiously constructive outlook maintained. A more aggressive fiscal policy and improved US-China relations could lead to a more bullish stance [1][2] - **Investor Sentiment Metrics**: The weighted MSASI (Morgan Stanley A-share Sentiment Indicator) increased by 6 percentage points to 47% compared to the previous cutoff date, while the 1-month moving average (1MMA) decreased by 2 percentage points to 55% [2] - **Turnover Statistics**: Daily turnover for various segments increased: - ChiNext: Up 5% to RMB 496 billion - A-shares: Up 6% to RMB 1,780 billion - Equity futures: Up 22% to RMB 376 billion - Margin transactions: Up 1% to RMB 2,473 billion [2] - **Net Inflows**: Southbound trading saw net inflows of USD 0.3 billion from December 4 to December 10, with year-to-date and month-to-date net inflows reaching USD 169 billion and USD 1.4 billion, respectively [3] Economic Outlook - **GDP Projections**: The 2026 GDP target remains at 5%, with a fiscal package expected to be flat compared to 2025. There is potential for a mid-year top-up of approximately 0.5 percentage points of GDP if necessary. The forecast for 2026 real GDP growth is maintained at 4.8%, with nominal GDP growth around 4.1% [4] - **CPI Trends**: November CPI showed strong performance due to fluctuations in vegetable prices and gold, while core services remained soft. December CPI is expected to be supported by a low base in food prices but weighed down by normalization in vegetable prices [14] Investment Considerations - **Cautious Optimism**: Despite recent volatility, a mid-single-digit upside is anticipated due to fair valuations and moderate earnings growth outlook for 2026. Key catalysts for a more bullish outlook include improvements in US-China relations and a more aggressive fiscal pivot, particularly regarding housing inventory [15][16] - **Sector Breakthroughs**: Advancements in China's technology sector and expanding markets could justify a significant re-rating of the market [15] Additional Insights - **Earnings Estimate Revisions**: The breadth of consensus earnings estimate revisions remains negative but has shown slight improvement compared to the previous week [2] - **Normalization of Sentiment Metrics**: The MSASI is based on 12 individual indicators capturing various dimensions of investor sentiment, normalized to reduce noise from high-frequency movements [17][18][19][20][21][22][23][24][25] Conclusion - The A-share market is experiencing increased sentiment and turnover, with cautious optimism for future growth driven by potential policy changes and sector advancements. Investors should monitor key economic indicators and sentiment metrics for further insights into market dynamics.

Summary of Morgan Stanley A-share Sentiment Indicator (MSASI) Relaunch Industry Overview - The report focuses on the A-share market in China, specifically the sentiment and technical signals related to the CSI 300 index. Key Points and Arguments Relaunch of MSASI - The Morgan Stanley A-share Sentiment Indicator (MSASI) was originally launched in March 2019 to track weekly shifts in A-share market sentiment. The relaunch is prompted by the evolution of data availability and market structure, which rendered some original inputs outdated [3][17]. New Design and Metrics - The updated MSASI features a broader scope and sharper signals, now incorporating 12 metrics instead of the previous nine. These metrics cover turnover, market sentiment, short-selling activity, fund flows, and fundamentals [4][19]. - New metrics added include: - New SSE account registrations - CSI 300 futures backwardation - CSI 300 call-put ratio - Foreign passive fund flows to the CSI 300 [4][26]. Methodology Enhancements - The new methodology employs a 100-day moving min-max normalization to smooth out noise and highlight medium-term sentiment shifts. This results in two versions of the index: - MSASI (Weighted): A real-time composite on a 0-100 scale - MSASI (Weighted 1MMA): A one-month moving average to highlight broader trends [5][33]. Tactical Framework - The MSASI helps identify sentiment extremes, with specific trading strategies suggested: - Short the CSI 300 when the index reaches ≥78% and close after 70 trading days, historically yielding a cumulative return of 31% [6][43]. - Long the CSI 300 when it falls to ≤22% and exit after 70 trading days, historically yielding a cumulative return of 91% [6][43]. Current Market Sentiment - As of late September 2025, MSASI surged but has since cooled due to US-China uncertainties, weak consumption, and reduced expectations for fiscal stimulus. The indicator remains elevated but has normalized from overheated levels [15]. Importance of Tracking Sentiment - The relaunch aims to provide a sharper gauge of market sentiment, crucial for identifying early inflection points and navigating shifts in investor behavior. The focus on China's A-share market is improving, particularly following government calls for a "slow bull" market [18]. Historical Performance - Historical data shows that readings above 78% typically indicate strong optimism, often preceding market pullbacks, while readings below 22% signal excessive pessimism, often leading to meaningful rallies [43]. Additional Important Content - The report emphasizes the importance of understanding sentiment as a crucial component of A-share market dynamics, especially in light of recent market developments and investor behavior [16][18]. - The methodology and metrics used in the MSASI are designed to adapt to changes in market conditions and data availability, ensuring the indicator remains relevant [19][28]. This comprehensive overview of the MSASI relaunch highlights its significance in tracking A-share market sentiment and provides actionable insights for investors navigating the evolving landscape.