Investors should buy stocks in Taiwan and Thailand, where shares lagged behind a rally in Asia and have yet to reflect improving economic prospects, said Sean Darby, head of regional strategy at Nomura Securities Co in Hong Kong.
Darby raised both markets to "bullish" from "bearish." He advised investors in Asia excluding Japan to put 22.3 percent of their assets in Taiwan, up from a prior recommendation for 13 percent.
He also called for an increase of about 4.3 percentage points in Thai stocks, to 5.4 percent.
Investors should reduce holdings in China and South Korea, Darby said. He cut his evaluation of Chinese equities to "bearish" from "bullish," citing "excessive" speculation on revaluation of China's currency, and lowered South Korea to "neutral" from "bullish."
"Taiwan offers a much better domestic consumption and capital expenditure story than Korea," the strategist said in a report dated Jan. 7. Taiwan's benchmark TAIEX index was up 4.2 percent last year and Thailand's SET Index was down 13 percent.