Chinese ADRs rallied in premarket trading. NIO surged over 13% after announcing $470 million investment in Nio China from strategic investors.

KE Holdings soared 12.45%; iQiyi rallied 11.31%; Bilibili rose 9.34%; XPeng, JD.com rose over 8%; Li Auto rose 7.64%; Alibaba rose 6%.

Morgan Stanley late Sunday had forecast at least another 10% stock-market rally in the near term. They expect a supplementary budget between 1 trillion ($140 million) and 2 trillion yuan next month as well as more rate cuts and looser housing market rules.

“Over the past week, the key stimulus has come on the monetary and property fronts, which we believe will be insufficient given their weak policy multiplier amid the prevailing deleveraging cycle,” they said.

“In our view, to decisively exit deflation, more central government leverage is needed to expand the housing buyback program and support social welfare reforms, and the optimal stimulus size should be >US$1trn over a two-year horizon. However, the initial pace and size of the policy pivot will likely remain modest,” they added.

Economists at Citi were not sure there will be an interim budget revision but did note there was about 3.3 trillion yuan of space to do so.

Analysts at BCA Research upgraded emerging markets equities to neutral from underweight as they also said a long Chinese equities paired with a short of Indian stocks could work. “Chinese stocks’ relative valuations are indeed so depressed that the bar is low for improved investor sentiment to trigger a mean reversion,” they said.