Morgan Stanley upgrades India's rating to ‘overweight’; downgrades China to 'equal weight'
Morgan Stanley has upgraded India rating to 'overweight'. It has reduced its rating on Chinese stocks to equal weight, saying investors should capitalise on a rally spurred by government stimulus pledges to take profits.
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FollowProminent global brokerage firm Morgan Stanley has made significant changes to its ratings for key Asian economies. The company has downgraded China to "equal-weight" while upgrading India to "overweight". This change represents Morgan Stanley's evaluation of the prospects for each nation in the current economic climate.
For India, the brokerage firm cited several reasons behind the upgrade. The nation's reform and macro-stability strategy was regarded as providing a good outlook for capital spending and profit, and relative values in India were seen to be less extreme than in October.
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Morgan Stanley emphasised the positive FDI and portfolio flow trends, which are supported by India's dedication to reforms and macroeconomic stability. The report emphasized the country's potential for sustained superior USD EPS growth compared to other emerging markets, with a young demographic profile further driving equity inflows.
Analysts at Morgan Stanley, on the other hand, voiced concerns about the future for China. The brokerage company lowered China to a 'equal-weight' rating, advising investors to take gains and exercise caution in the midst of the current boom brought on by government stimulus programmes.
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China's softening actions are anticipated to be moderate and may not be enough to sustain the advances in the stock market, the experts noted. The property and labour markets, geopolitical considerations, and areas that need considerable adjustment, such as the LGFV (local government finance vehicle) debt, were also noted as having the ability to affect the country's future inflows and re-rating potential.
Furthermore, Taiwan also faced a downgrade to an 'equal-weight' rating by Morgan Stanley. This decision was driven by stretched valuations in the tech sector amid a recent rally.
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