Morgan Stanley Downgrades Indian Assets, Citing Energy Supply Risks

Golden Ten Data, March 6 – Morgan Stanley is taking a more cautious stance on Asian stock markets and reducing its exposure to the Indian market, citing concerns that if oil shipments through the Strait of Hormuz cannot be restored, a war involving Iran could disrupt supply chains. “We remain defensive,” Morgan Stanley strategists Daniel Blake and Jonathan Garner wrote in a March 5 report. “Asia remains highly dependent on supplies of crude oil, refined products, and liquefied natural gas from the Middle East, and we believe the market is too complacent about supply chain risks.” In their latest asset allocation adjustment, the strategists downgraded India from “overweight” to “neutral,” noting that India is one of the Asian markets most vulnerable to disruptions in Qatari LNG supplies. They stated that, given uncertainties surrounding the outlook for artificial intelligence and high valuations, global investors may choose to wait, possibly until the technology cycle in South Korea and Taiwan peaks, before increasing their allocation to India again.