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Morgan Stanley recommends profit booking; says market valuation above EM average

market | Nov 16, 2021 3:37 PM IST

Morgan Stanley recommends profit booking; says market valuation above EM average

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Morgan Stanley is bullish on the India story but believes that current valuations are one standard deviation expensive to the long-run average versus other emerging markets.

Morgan Stanley recommended booking profits in India a few weeks ago, Jonathan Garner, chief Asia and emerging market equity strategist, told CNBC-TV18. Garner reasoned that valuations in India have run up above emerging market (EM) averages.

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“We have been overweight India for the whole of this year. It had one of its best years ever; performance versus other emerging markets and certainly the best year ever for performance versus China. So there is nothing that fundamentally changed in our economic or investment narrative for India, but valuations are now one standard deviation expensive to the long-run average versus other emerging markets,” Garner said.
According to him, inflation is the biggest risk to global markets. “Our economists feel that the inflationary pressures globally will be transitory and that inflation will roll back down, including in the US next year,” said Garner.
On commodities, Morgan Stanley is not bullish on iron ore but neutral on copper.
"We are positive on areas like aluminium that is benefiting from the environmental changes that we are seeing in the production environment globally. So we are not recommending commodity exposure here. The top areas for us are upstream energy and industrial metals. We are not particularly bullish on in aggregate,” said Garner.
For the entire interview, watch the video
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