Great call Morgan Stanley------
Monday June 17, 11:30 pm Eastern Time
Reuters Market News
RESEARCH ALERT-Morgan Stanley ups Japan, cuts US stocks
(Updates with details)
TOKYO, June 18 (Reuters) - Morgan Stanley has raised the Japanese stock weighting in its model portfolio to "neutral" from "underweight", while suggesting that clients further reduce their exposure to U.S. equities.
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"The U.S. paradigm that once flourished is tarnished, and the rest of the world again is part of the investment landscape," portfolio strategist Robert Pelosky wrote in a note to clients dated June 17.
"I believe we are still in the early stages of investment rebalancing away from the U.S."
Morgan cut its weighting on U.S. stocks by two percentage points to 52 percent in its model global portfolio.
Pelosky said Morgan expected U.S. economic growth and financial asset returns to be below par over the next few years. He also noted concerns over a weaker dollar.
At the same time, Morgan has kept its overweight stance on Europe at 31 percent and suggests investors raise their weighting of Japanese stocks by one percentage point to nine percent in the portfolio.
Morgan said that monetary policy and restructuring efforts were beginning to help the economy. Corporate restructuring was being fostered by the growth of China as an industrial platform for Asia, it added.
Morgan Stanley's move follows a decision by U.S. investment bank Merrill Lynch in early March to upgrade Japanese equities and advise clients to cut their exposure to U.S. and British shares.
The Bank of Japan said last Wednesday it would maintain its super-loose monetary policy for now, apparently recognising the improvement in the economy but recognising, too, that it had not improved enough to justify any tightening.
The central bank has effectively held interest rates close to zero since March 2001.
On Monday, the Japanese government kept its assessment of the economy unchanged in its June report but confirmed its view that the economy had bottomed out after recession. It had previously upgraded its view three months in a row.
The benchmark Nikkei average (^N225 - News) has jumped 28 percent from a February low to a nine-month intraday high of 12,081.43 on May 27. It has since pulled back 10 percent, ending Tuesday's morning session at 10,835.66.
The Nikkei is still up nearly three percent since the start of the year. The tech-heavy U.S. Nasdaq index (NasdaqSC:^IXIC - News), in comparison, has fallen 20 percent.
biz.yahoo.com
5 day chart--http://quote.yahoo.com/q?s=^N225&d=c&t=5d&l=on&z=b&q=l |
