Taiwan, China and Hong Kong are best placed in Asia to face accelerating inflation while Thailand, Indonesia and India are the most vulnerable, Morgan Stanley said.
The brokerage has moved “overweight” on Taiwan’s stocks, suggesting investors hold more of the country’s shares than are represented in benchmark indexes, analysts including Malcolm Wood and Ryan Tsai said. They recommend buying Taipei-based China Airlines Ltd (CAL, 中華航空) and selling Bangkok-based Siam Commercial Bank Pcl.
“China is best positioned in the region, given its absorption of record oil prices, decelerating food inflation, strong currency and low core inflation,” the analysts said in a report yesterday. “Thailand is suffering from its high oil intensity, rapidly accelerating food inflation, and rising core inflation.”
China’s overall consumer-price growth slowed to 7.7 percent last month from 8.5 percent in April, close to a 12-year high, the statistics bureau said last Thursday.
“We do recommend buying China because we think inflation has already peaked” and valuations are “pretty attractive,” Tsai said in a phone interview yesterday.
Morgan Stanley recommends buying Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行), according to the report. ICBC, the nation’s biggest lender, retreated 25 percent from its Oct. 30 record.
PetroChina Co (中國石油天然氣) and China Mobile Ltd (中國移動通信) are also among Morgan Stanley’s model portfolio, according to the report.
PetroChina, the nation’s largest oil producer, has dropped 23 percent this year, while China Mobile, the world’s No. 1 cellphone operator by users, declined 21 percent.
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