Morgan Stanley Soars 4.18% on Hedge Funds' China Bullishness

On May 12, 2025, Morgan Stanley's stock surged by 4.18% in pre-market trading, reflecting a significant bullish sentiment among investors.

Morgan Stanley's recent report highlights a notable shift in investment strategies among hedge funds. Last week, these funds, particularly those based in the United States, increased their bullish bets on Chinese stocks. This move is driven by optimism surrounding the progress of Sino-U.S. trade negotiations. The MSCI China Index and the Shanghai-Hong Kong 300 Index both saw gains of 2.4% and 1.9% respectively, ahead of the Geneva trade talks.

The positive outlook from both sides following the Geneva talks further boosted market confidence. Official statements from both countries indicated substantial progress, including a significant reduction in bilateral tariffs and a temporary halt on additional tariffs. This development is seen as beneficial for both countries' economies and global stability.

Despite the increased interest in Chinese stocks, Morgan Stanley notes that hedge funds' overall risk exposure to China remains below peak levels. This cautious approach suggests that while there is optimism, investors are still mindful of potential risks.