Morgan Stanley has shifted its stance on Chinese stocks from bearish to more optimistic, citing a structural regime shift in China's equity market. The bank's strategists, led by Laura Wang, now recommend an equal weight position on MSCI China, expecting the index to reach 77 by the end of 2025. This change in outlook follows a period of sustained upward momentum in the Chinese stock market, with the gauge entering a bull market earlier this month. Morgan Stanley's optimism is part of a broader trend among foreign financial institutions, including UBS, which are becoming increasingly upbeat on Chinese equities due to a stable economic recovery and the rapid rise of DeepSeek, prompting a re-evaluation of Chinese tech shares.