Morgan Stanley: Suggest avoiding US small caps, cyclical stocks

On July 1st, Jinshi Data reported that Morgan Stanley strategists stated that stock market investors entering the US election season should continue to select stocks and maintain a preference for high-quality US stocks, as the market is considering the scenario of a Republican victory after last week's debate. Strategists led by Michael Wilson said that investors should focus on high-quality stocks, which typically have more stable earnings, stronger balance sheets, and higher gross profit margins, while staying away from small-cap cyclical stocks. 'Under the scenario of a Republican victory, there is a downside risk for growth, partly due to immigration reform and tariffs,' they wrote. Given that inflation and fiscal sustainability have also become concerns, this dynamic 'may not be favorable for low-quality cyclical sectors and small-cap stocks in this scenario.'