Morgan Stanley strategists have adopted a defensive stance on Asian equities, trimming their India exposure due to concerns over potential supply chain disruptions from the Iran war.
The strategists, including Daniel Blake and Jonathan Garner, downgraded India from overweight to equal-weight, citing the country's high exposure to Qatari LNG supply disruptions.
With uncertainty surrounding AI and high valuations, global investors may wait before shifting back towards India, they said.
Morgan Stanley's shift highlights rising geopolitical risks as the Iran war reshapes energy flows and risk premiums.
Concerns are mounting that a sustained supply shock may spark a global economic slowdown, undermining key export industries.
Foreign investors have withdrawn about $1.3 billion from India since the war began, with even larger outflows seen in Taiwan and Korea.
Morgan Stanley also cut the United Arab Emirates to equal-weight from overweight, while upgrading Taiwan and Saudi Arabia to equal-weight from underweight.
