Morgan Stanley: Here's what we like in China

China's economic slowdown isn't spooking Morgan Stanley, which has its eye on the mainland's "new economy."

Gokul Laroia, Morgan Stanley's co-CEO for Asia Pacific, told CNBC there was "a real disparity between the new China companies and the old China companies in terms of growth and in terms of prospects."

"Healthcare is a sector we love, the internet and technology broadly is a sector we like a lot," he said on the sidelines of Morgan Stanley's Asia Summit. "Certain companies in the consumer value chain we think there's real growth and opportunity for folks to look at."

Analysts have raised a slew of concerns about the Chinese economy as it transitions from a manufacturing base to services; The country is hooked on debt, the shadow banking sector has imploded, the property market sometimes shows signs of a bubble and major industries are slowing.

Data from China earlier month showed factory output growth had slowed to a seven-month low of 5.6 percent in October, while investment expansion slipped to the weakest pace since 2000.

"The big issue with China in particular has been that the old economy has been impacted by overcapacity, over-leverage, deflation and, as a result, very weak earnings and that accounts for the vast majority of the market cap. But that's changing," Laroia said, citing the MSCI's decision to include the American Depository Receipts (ADRs) of 14 Chinese companies in its $3.5 trillion market-cap emerging market (EM) index.

MSCI announced the change on Thursday following the conclusion of its semi-annual review. With the new additions, the weighting of Chinese stocks in the EM Index rose to 26 percent, from 23 percent. The rebalancing could see around $7 billion move into these ADRs on the back of buying from funds that passively track the index.

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"That's adding $150 billion of free-float market cap into the new economy, which gives people a chance to gain more exposure if you're index-benchmarked," Laroia said.

In addition, he noted that Morgan Stanley, which was a lead underwriter for Chinese tech giant Alibaba's initial public offering (IPO), was seeing more new economy companies in its IPO pipeline.

"There's a whole host of different business models that continue to do reasonably well and grow rapidly in China. It's gaming, it's advertising-based, it's ecommerce-based, platforms, verticals. We're pretty optimistic," Laroia said. "A company like Alibaba comes about once in a generation perhaps, so nothing quite of that scale, but is there enough for the year next year."

To be sure, China's economy is slowing, with third-quarter gross domestic product (GDP) growing 6.9 percent on-year, its slowest pace since 2009, during the Global Financial Crisis.

"Growth is slowing but the pace of slowdown is moderating," Laroia said. "While the macro remains uncertain and even somewhat challenging, there are businesses and companies that continue to do well and our message to investors is to focus on the micro, focus on the companies and the macro will be what the macro will be."

- Nyshka Chandran contributed to this report.