Morgan Stanley says these global stocks are 'high conviction ideas to own'

Published Mon, Aug 23 20217:30 PM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Analysts at Morgan Stanley have picked a raft of "high conviction" global stocks to buy in sectors such as technology, materials and financials. In a research note published Aug. 15, the bank warned of a "muted" economic recovery in Asia-Pacific and emerging markets and suggested a "cautious" stance with regards to China given its ongoing regulatory crackdown . "Covid-19 outbreaks and lock-downs are inversely correlated with the performance of domestic-facing stocks. Asia / EM [emerging markets] is generally lagging DM [developed markets] on vaccinations, and it won't be until late in Q4 at the earliest that Asia breaks out of this cycle," the analysts led by Jonathan F Garner stated. "We think commodity prices have made their cycle peaks though valuations are reasonable in Energy & Materials," the analysts said, adding that Morgan Stanley is overweight-rated on regions including Australia, India, Singapore and Brazil. With these factors in mind, the bank produced lists of "high conviction ideas to own" for Asia-Pacific (excluding Japan) and emerging markets, all of which it is overweight on. Its tech picks include Indian IT group Tata Consultancy Services , Argentinian software firm Globant and South Korean giant Samsung . Morgan Stanley also chose insurer AIA Group , Singaporean group DBS , and Australian banks Macquarie Group and Westpac . In materials, the bank picked Korean steel company POSCO , Thai packaging group SCG , Mexican construction supplier Cemex , South African miner Northam Platinum and Brazilian iron ore producer Vale . Energy stocks on its list include oil and gas firm PetroChina and Chinese battery company Shanghai Putailai New Energy Tech. On a separate list of "high conviction" ideas for Japan, it picked Yahoo Japan owner Z Holdings , travel agency HIS , gaming firm Nintendo and human resources firm Recruit Holdings . In electricals it chose Sony , motor company Nidec and optical-makers HOYA and Olympus . "Japan is quickly closing the gap with DMs [developed markets] on vaccinations and is ahead of EM [emerging markets] on earnings estimate revisions and trading on an unusually low valuation premium," Morgan Stanley's analysts stated.

Smartphones shown at the Samsung Unpacked product launch event in New York, U.S., on Tuesday, Aug. 10, 2021.

Nina Westervelt | Bloomberg | Getty Images

Analysts at Morgan Stanley have picked a raft of "high conviction" global stocks to buy in sectors such as technology, materials and financials.