Morgan Stanley (MS) Soars 4.22% on US-China Trade Optimism

On May 12, 2025, Morgan Stanley's stock surged by 4.22% in pre-market trading, reflecting a significant bullish sentiment among investors.

This surge can be attributed to the positive developments in the ongoing trade negotiations between the United States and China. According to a report by Morgan Stanley, hedge funds, particularly those based in the U.S., have increased their bullish bets on Chinese stocks. This move is driven by the optimism surrounding the progress in the trade talks, which have shown promising signs of a potential agreement.

The report highlights that hedge funds have re-entered the Chinese market by purchasing stocks listed in the U.S. and on the A-share market. This renewed interest in Chinese stocks is a stark contrast to the reduction in holdings in other Asian markets, such as Thailand, Hong Kong, India, and Australia.

The positive outlook on the trade talks has also been reinforced by statements from officials on both sides, who have expressed optimism about the progress made during the recent negotiations in Geneva. This has further fueled market enthusiasm, with the Hang Seng Index and the Hang Seng Tech Index both experiencing significant gains.

Despite the increased bullish sentiment, Morgan Stanley notes that the overall risk exposure to China remains below peak levels. This suggests that while there is optimism, investors are still cautious about the potential risks involved.