Morgan Stanley Predicts Stronger Hong Kong Stock Recovery in August Amid Short Covering and Southbound Capital Inflows

According to Morgan Stanley, Hong Kong stocks are expected to achieve a stronger recovery in August as short covering and southbound capital inflows help restore momentum. The brokerage noted that current extreme underweighting positions present a buying opportunity and recommends gradually increasing positions.

Global investor interest in Chinese equities is rising, with capital expected to gradually reallocate to Chinese stocks over the coming months. Morgan Stanley highlighted that Hong Kong markets are well-positioned for significant August recovery, supported by e-commerce confirmation that price war damage to profits has peaked, further AI commercialization progress, and potential relief from July IPO lock-up pressure.