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Morgan Stanley Tops II’s All-Asia Research Rankings

The firm ranked No. 1 in Institutional Investor’s survey of investment professionals managing $1.7 trillion in Asian equities.

  • Staff

From The All-Asia Research Team 2017 ranking

Morgan Stanley is the top provider of Asia-focused research for a third straight year after the bank’s sell-side analysts helped investors navigate such concerns as China’s slowing growth, according to Institutional Investor’s 2017 All-Asia Research rankings

UBS Group AG climbed to second place, from fourth, as it doubled down on its research team. Bank of America Corp. ranked third, followed by Citigroup Inc. and Credit Suisse Group AG in a tie for fourth, according to II’s survey of 4,020 investment professionals managing an estimated $1.7 trillion in Asian equities. 

The opening months of 2016 were fraught for Asian markets, as a slowing Chinese economy sparked volatility throughout the region. Add in the geopolitical uncertainties resulting from Brexit and the U.S. election, and you have what UBS’s head of Asia Pacific research Damien Horth describes as a “challenging” year. 

Still, Morgan Stanley believed a sharp slowdown in China was “unlikely,” according to Chetan Ahya, a managing director who covers China, Hong Kong, and India for the bank. 

“Better external demand and a rebound in private [capital expenditure] will partly offset the deceleration in credit-intensive investment growth,” he said, adding that the “worst of disinflationary pressures” were “behind us.” 

Morgan Stanley was distinguished for its coverage of the Chinese economy, the world’s second largest after the U.S., coming in first place for its team led by analysts Edward Xu and Richard Xu. 

Analysts at the bank won other top team positions, ranking first in such sectors as autos and auto parts, banks, industrials, oil and gas, and telecommunications. 

China’s reform of state-owned enterprises has been a major focus in its economy, particularly in the oil and gas sector, where private investors have begun buying shares in companies, according to Vikram Sahu, Asia Pacific research head at Bank of America Merrill Lynch. 

As for the rest of Asia, Morgan Stanley’s head of Asia Pacific research William Greene said the region has been a “key beneficiary” of the global economic recovery. 

“The upswing in the global trade cycle will support economic growth, reduce disinflationary pressures, and help policymakers better manage the debt dynamic,” Greene said. “The upturn in nominal GDP growth will give companies the incentive to invest, resulting in better quality of growth.” 

UBS’s Horth also noted that Asian economies are “very connected to the global trade cycle” – but warned that this could be a source of uncertainty for the region as well as growth. The impending decision by index-provider MSCI on which countries to include in its emerging markets benchmark could give more influence to China and Asia, he added. 

“Investors simply can’t ignore the region,” he said. 

UBS jumped to No. 2 in II’s rankings this year after doubling down on its Asia research coverage, bolstering its quantitative capabilities while adding a new team focused on big data and geospatial analysis, according to Horth. The return of a star analyst from maternity leave at the beginning of last year didn’t hurt, either. 

UBS analysts were voted the best in sectors including consumer staples, technology and IT services, and transportation. The firm also earned a top spot for its coverage of Australia and New Zealand, as well as for its economic and quantitative research. 

Though Bank of America Merrill Lynch slipped to the third best provider of Asia-centric research, the firm maintained high rankings in 29 sectors, besting Citi and Credit Suisse, which tied for fourth. 

Bank of America Merrill Lynch analysts were chosen as top research providers for basic materials and internet companies, while also ranking first for their Thailand coverage and currency and rates strategy research. 

The firm’s Sahu said environmental issues would likely lead to supply constraints in basic materials, leading to better buying opportunities, particularly as demand for steel, coal and cement in China remains strong. 

Although fourth overall, Citi received the most votes of any firm for its real estate coverage, led by analyst Kam Keung (Oscar) Choi. The bank also came in second place for its research on China – also spearheaded by Choi. 

Credit Suisse, meanwhile, came in first for its coverage of the insurance sector, as well as technology and semiconductor companies. The firm also earned a No. 1 spot for its research on Malaysia, while coming in second to UBS for its equity strategy research.