Morgan Stanley turns more cautious on Asian stocks, cuts India
Morgan Stanley is adopting a cautious approach to Asian equities, reducing its India holdings due to concerns over potential supply chain disruptions from the Iran conflict. The firm highlights Asia's heavy reliance on Middle Eastern energy suppl...
By Bloomberg |
ETMarkets.com
Morgan Stanley is becoming more cautious about Asian stocks. They have reduced their investment in India.
Morgan Stanley is adopting a more cautious stance on Asian equities, trimming its India exposure on concerns that the Iran war may disrupt supply chains if oil flows through the Strait of Hormuz fail to recover.
“We stay defensive,” Morgan Stanley strategists including Daniel Blake and Jonathan Garner wrote in a note dated March 5. “Asia remains critically dependent on Middle Eastern supply of crude oil, refined products and LNG and we believe the market is too complacent about supply chain risks.”
The strategists downgraded India from overweight to equal-weight in their latest reshuffle, citing the country as one of the Asian markets most exposed to potential Qatari LNG supply disruptions. With uncertainty around AI and high valuations, global investors may wait — possibly until South Korea and Taiwan’s tech cycle peaks — before shifting back toward India, they said.
Morgan Stanley’s shift highlights rising geopolitical risks as the Iran war reshapes energy flows and risk premiums. Prolonged disruption in the Strait of Hormuz could lift oil and LNG prices, pressure energy-importing Asia, and trigger earnings downgrades. Concerns are mounting that a sustained supply shock may spark a global economic slowdown, undermining key export industries.
Global investors are pulling money out of emerging Asia’s major markets. Since the war began, foreigners have withdrawn about $1.3 billion from India, which has limited exposure to AI. Meanwhile, chip-heavy Taiwan and Korea have seen even larger outflows — $1.6 billion from Korea this week and about $7.9 billion from Taiwan.
