In a surprise move, Morgan Stanley, the Big FII made changes in the Asian Emerging markets. Morgan U
pgrades Korea to Ovweweight & Egypt to Equalweight / Downgrade India to EqualWeight & Turkey to Underweight.
It said in a report,
India improves on: a) dividend yield and b) business cycle. However, deteriorations are greater in number and size: a) trailing P/E, b) trailing ROE, c) EPS growth, d) EPS revisions, and e) fund manager weightings, where the market now ranks #20 of 20 on our metric.
Consensus expects MSCI Korea to deliver an ROE that is 0.9x that of India in 2010 (13.5% vs. 15.5%). This would be the highest in 10 years, driven by cyclicals but also relative improvement in banks and telcos. (MS analysts expect 13.6% ROE for Korea and 16.2% for India). Yet the relative P/B for Korea vs. India remains in line with 10-yr average levels (0.4x). Meanwhile, due to worse underlying inflation trends, the ratio of Indian to Korean 10-yr bond yields has spiked from 1.4x to 1.6x since Jan-2010.
Morgan Stanley has been in India for almost 2 decades now and has invested significantly in gathering Intelligence of Corporates and Stock markets with its sophisticated Investment and Analytical tools with which they model the data and look for Markets with high return.
Why Morgan's Rating Matters in India ?Morgan is a Big Influences as Hedge Funds and Institutional Investors new to India / Emerging Markets rely and depend on Morgan's Research and shift their portfolios accordingly.
