NEW YORK ( TheStreet) -- Emerging market stocks are expected to accumulate gains of almost 39% by the end of 2012, according to a Morgan Stanley report. Further, the speculation of China's easing inflation will loosen monetary policies and mitigate the negative impact of the European debt crisis on China stocks.The report adds that China is favored among emerging markets in Asia with higher importance on its consumer companies. An emerging markets and Asia strategist with Morgan Stanley estimates a soft landing for China's economy with earnings growth supporting market sentiment. In a separate survey by Bank of America Merrill Lynch, almost 28% of the fund managers are overweight on emerging market equities. Moreover, the survey reveals that with an improving China growth outlook, exposure of Asia-Pacific investors to China's economy has been the highest in past four months.