In its strongest showing since 2002, Morgan Stanley reenters the top three on this lineup, climbing from runner-up to No. 3 under the direction of Hong Kong–based Jonathan Garner. The 11 strategists are “consistent, precise and timely with the data they send,” one backer reports. “They also know how to get clients thinking about catalysts — they’re good at nudging people into action.” The group maintains a watchful stance on the region, given ongoing growth and productivity concerns. Pockets of strength, they advise, can be found in such sectors as autos, banks, energy, household and personal products, insurance and semiconductors. However, they recommend underweighting beverages and tobacco, capital goods, consumer durables, diversified financials, food and transportation shares. Specific names they favor include HDFC Bank and Tencent Holdings. India’s fifth-largest bank by assets is well capitalized and benefits from having low-cost deposits constitute nearly half of its total, which is a boon when interest rates are rising. Moreover, it has “virtually no legacy asset-quality issues in the form of restructured loan balance and very low infrastructure exposure,” says Garner. In late April the shares were trading at 725.50 rupees, and the squad maintains a target price of 1,000 rupees. The bullish case for China’s giant Internet retailer derives from its dominant revenue and traffic volume positions in the country’s online consumer market. Also, the analysts expect earnings to grow at 30 percent through 2016, which could be boosted further by opportunities in the mobile space. Garner’s team projects an upside of 29.9 percent from the stock’s HK$523.50 value in late April. |
The 2014 All-Asia Research Team: Equity Strategy, No. 3: Jonathan Garner & team