SHANGHAI, March 26 (Reuters) - Wall Street firm Morgan

Stanley ( MS ) raised their index targets for Chinese shares for

a second time this year, citing higher earnings growth forecasts

and a better outlook for the economy and currency.

The bank revised up its year-end index targets for Hong

Kong's benchmark Hang Seng Index, Hang Seng China

Enterprises index, MSCI China index and

China's blue-chip CSI300 index to 25,800, 9,500, 83,

and 4,220 points, respectively.

"The new and higher index price targets are driven by both

moderate increases in earnings growth forecasts and higher

valuation targets," the U.S. bank said in a note on Wednesday.

It also cited "improved macro and FX outlook forecasts".

Chinese stocks have gained momentum this year, with the MSCI

China index about rising 16% so far this year, underpinned by

investor optimism about progress in generative AI and Beijing's

stimulus measures to support consumption and the broader

economy.

Morgan Stanley ( MS ) also raised its forecast for China's economic

growth in 2025 to 4.5% from 4.0% previously. It revised its yuan

predictions to 7.35 per dollar by mid-2025 and 7.50 at the end

of this year, versus 7.50 and 7.60, respectively, in a previous

estimate.

"We have always made the point that currency strength serves

as an important factor for Chinese equities, especially for the

offshore market.

"This is because foreign investors' funding costs are

usually in U.S. dollar terms, which means a relatively stronger

or less weak currency should be a positive catalyst from an

asset allocation perspective."