Morgan Stanley Plunges 5.74% Amid Eurozone Concerns While BYD Soars with a 32% Surge

On March 4, Morgan Stanley saw a dramatic decline, falling 5.74% for the day and experiencing an 8.56% drop over the past two days. This rapid downturn brought their stock to its lowest point since November 2024. The decline coincides with Morgan Stanley's economists reporting weaker-than-expected data from the Eurozone, which could compel the European Central Bank (ECB) to accelerate rate cuts. This projection suggests interest rates might achieve a neutral level by June 2025, set at 2.0%, according to Morgan Stanley's analysts.

The report outlines that Eurozone data for inflation and growth have underperformed expectations. February's core inflation rate and purchasing managers' index (PMI) hinted at a weaker-than-anticipated recovery for the first quarter, potentially prompting a quicker approach to the ECB's targeted interest rate. Analysts have now incorporated an anticipated rate cut for April into their forecasts, marking a shift from previous projections.

In a related sectoral analysis, Morgan Stanley addressed a wave of investor inquiries regarding BYD's recent equity financing move. Given the stock's 32% surge over the past month, aided by the intelligent driving concept's popularity, the decision's timing was unexpected. Despite potential market concerns suggesting that this could signal an industry peak for the automotive sector, Morgan Stanley maintains a supportive view of ongoing demand bolstered by new product offerings and advancements in autonomous driving technology.

The analysts recommend leveraging potential buy-in opportunities during the short-term market corrections, specifically ahead of the industry’s busy new car launch period scheduled for April to May. Consequently, Morgan Stanley holds its rating for BYD’s H-shares at "market perform" with a set target price of HKD 270.

Separately, Morgan Stanley's recent engagements include dialogues with two publicly listed companies, Oriental Yuhong and Union Tech, to delve into their operational strategies and financial health. These interactions form part of Morgan Stanley's ongoing assessment of potential investment opportunities and sectoral strengths within the broader market framework.