LONDON: Morgan Stanley raised Malaysia and Egypt to overweight in its model stocks portfolio and cut Peru and Chile to underweight from equal weight, the bank said in a research note received on Friday.
It said also that it was reducing its overweight on India where interest rates are expected to start rising in early 2010.
Morgan Stanley said Egypt valuations looked cheap while earnings growth potential is strong. A firm ringgit plus the likelihood of an export boost as the global economy recovers was the rationale behind increasing Malaysia allocations.
Morgan Stanley is now overweight China, Brazil, Taiwan, India, Israel, Poland, Malaysia and Egypt and is underweight South Africa, Turkey, Hungary, Thailand, Philippines, Peru and Chile.
In Chile, Morgan Stanley said earnings growth expectations had fallen.
Without strengthening, pension funds should continue to allocate towards foreign equities, the note said. Peru…looks expensive to history and peers and is very overbought. -Reuters
