Morgan Stanley-China Equity Strategy 4Q23 Earnings Final Cut – Biggest Mis...-107933808

MApril30,202409:00PMGMTUpdateChinaEquityStrategyAsiaPacificMorganStanleyAsiaLimited++8522848-6853+656834-81724Q23EarningsFinalCut–LauraWangBiggestMissSince2018+8523963-4186EquityStrategistChineseequities'earningsin4Q23markfurtherdeteriorationLaura.Wang@morganstanley.comandindicatealongerperiodofestimatecuts.1Q24resultsremaincriticalforanysignsofstabilization.MorganStanleyAsia(Singapore)Pte.+AsofApril30,2024,639companiesoutof765(83%)inMSCIChinahadreportedJonathanFGarner4Q23results,while594outof761(78%)MSCIChinaAOnshorehadreported.Keytakeaways:EquityStrategistJonathan.Garner@morganstanley.comMSCIChina–worstquartersince2018:30%ofconstituentcompanieshavemissedconsensusforecastsbynumberofcompanies,buttheresultswereaMorganStanleyAsiaLimited+marginalnetbeatifmeasuredbyweightedsurprise(+7%)(Exhibit1,Exhibit2).Thescaleofthenetmissin4Q23earnings,ifmeasuredbynumberofcompanies,isCatherineChenthelargestsincewestartedtrackingearningssurprisessystematicallyin2018,reflectingagraduallyexpandingscopeofearningsresultsdeterioration.EquityStrategistCatherine.Chen@morganstanley.comA-sharemarket–asimilardisappointingscene:Reportedearningshavefallenshortofconsensusnotablybybothnumberofcompanies(-38%)andweightedExhibit1:HistoryofChineseequitymarketsurprise(-16%).Thescopeofmiss(bynumberofcompanies),aswithMSCIChina,isquarterlyearnin...