Tags: Morgan Stanley Buy Global Stocks Now Despite European Fears

Morgan Stanley: Buy Global Stocks Now Despite European Fears

Thursday, 03 Jun 2010 08:53 AM

Morgan Stanley is calling for investors to overweight emerging markets equities, perhaps emboldened by a contrarian streak after the investor exodus from Brazil, Russia, India, and China.

It was the company's first recommendation for portfolio allocation change since last June.

Despite the global concerns that have emerged recently, strong earnings results have lead to rapidly increasing 2010 earnings per share (EPS) growth forecasts for the full year, the bank said its research shows.

This means that the underlying earnings fundamentals have become far stronger in the last two months despite the gloom out of Europe and concerns regarding China tightening.

The bank has also reduced its cash position from 5 percent to 3 percent.

As fears of a halt to the global recovery send investors flying out of stocks, emerging markets are in a familiar position, falling hard after an outsized pop last year, MarketWatch reports.

The drops, in some cases into bear markets, have dimmed hopes that stronger finances in the economies of many top-performing markets could buffer them when investors decided it was time to sell.

The MSCI Barra Emerging Markets Index, which tracks stock performances in 22 countries, has tumbled 18 percent from its April 15 closing high.

The MSCI EAFE Index, the index of 21 developed markets, including the debt-troubled countries of Greece, Portugal and Spain, has slid a steeper 20 percent from its April 15 peak.

Market declines of 20 percent are considered as an entry point into a bear market.

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Morgan Stanley is calling for investors to overweight emerging markets equities, perhaps emboldened by a contrarian streak after the investor exodus from Brazil, Russia, India, and China. It was the company's first recommendation for portfolio allocation change since...
Morgan Stanley Buy Global Stocks Now Despite European Fears
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2010-53-03
Thursday, 03 Jun 2010 08:53 AM
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