Morgan Stanley says the bottom is for emerging market stocks

Amid “abundant” signs of capitalization, these markets have a high probability of bottom formation, investment bank strategists, including Jonathan Garner, wrote in the note on Tuesday, adding that they exclude Japan’s stocks from emerging markets and emerging markets. The recommendations on Asia are shifting in more than equal weight. Weight.

Garner’s revaluation, which earlier this year correctly predicted a deeper path into emerging and Chinese markets, comes just as EM stocks pulled off a record pullback from their recent peak amid a rising dollar and China’s tighter COVID restrictions. Is.

“A lot of the wood has been cut,” wrote Garner and his colleagues, and “it’s time to plant for the next cycle.” Investors “should turn to the proven beneficiaries of the opening cycle,” he said, upgrading Korea, Taiwan, the semiconductor and tech hardware sectors to overweight.

As per the note, a framework of 10 signposts used by Morgan Stanley to identify turning points in the market now indicates a high probability for EM and Asian stocks to become a trough, which could be a “compelling” buy. Indicates opportunity.

Morgan Stanley said South Korea and Taiwan are “the most convincing opportunities in the new cycle” as both markets have underperformed this year and a turning point in the semiconductor inventory cycle is near.

In separate reports, the investment bank has acquired Korean chipmakers SK Hynix Inc., Apple Inc. Supplier LG Display Company and its Taiwanese rival AUO Corp. Upgraded shares, including Taiwan Semiconductor Manufacturing Co.

In a bid to upgrade Asia’s tech-heavy markets, Morgan Stanley downgrades, downgrades its thoughts on some of this year’s outperformers India To give less weight and equal weight to Indonesia and Singapore.

Morgan Stanley said it expects the MSCI EM benchmark, which has fallen 26% this year, to rise by about 12% from now to June.