Morgan Stanley and Goldman Sachs predict a challenging year ahead for Hong Kong-listed Chinese stocks, with Morgan Stanley estimating the Hang Seng Index to hover around 18,500 points by next year's end. Due to modest earnings growth, Goldman Sachs has downgraded its outlook on these stocks, rating Chinese companies in Hong Kong as market-weight and local firms as underweight. Despite this, both banks show a preference for mainland-traded shares, particularly in sectors like artificial intelligence and state-owned enterprise reforms. They also express optimism for Indian stocks, attributing it to India's strong growth prospects. Meanwhile, the Hang Seng Index saw a recent uplift, gaining 1.3% amid hopes for easing geopolitical tensions following talks between Presidents Xi Jinping and Joe Biden.
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