Key Takeaways Morgan Stanley downgraded the U.S. auto sector and several companies in it because of growing competition from China.General Motors and Ford had their ratings and price targets cut.Morgan Stanley noted that China now produces 9 million more cars than it buys.

Investors should stop prioritizing Chinese stocks listed on the mainland over those trading overseas, according to Morgan Stanley.

NEW YORK (Reuters) -Shares of Ford Motor and General Motors fell about 5% on Wednesday after Morgan Stanley analysts downgraded the U.S. automakers, citing a challenging market environment marked by falling prices and growing competitive threats,

China recently announced stimulus to boost its struggling economy. Morgan Stanley expects these three commodities stocks to benefit.

China stocks closed out their best week since 2008 as the country's central bank cut its reserve requirement for banks.