MUMBAI, Feb 25 (Reuters) - Investment bank Macquarie has deepened its “underweight” stance on Thailand, warning that “simmering civil war” will have a more fundamental impact on valuations as the Southeast Asian country is battered by violent anti-government protests.
In its latest rejig of its Asia ex-Japan portfolio, Macquarie also reduced its “overweight” stance on Korean equities. The bank said that while the domestic story remains strong, it is concerned that as government stimulus fades, real estate-driven increase in lending and consumption would not be sufficient to propel the Korean economy and equities.
South Korean shares hit a one-month high on Tuesday as sentiment was boosted by a record-breaking performance on Wall Street and plans from the South Korean government to improve Asia’s fourth-largest economy.
Macquarie reduced its “underweight” on Indonesia saying it was only at the very early stages of reining in domestic demand, while maintaining “overweight” on the Philippines as it has the best promise of “reform inspired growth”. High imports and a weak rupiah have put a strain on Indonesia by widening its current-account deficit.
Last week, JP Morgan also upgraded Indonesia and Philippine shares to “overweight” from “neutral” in its global emerging markets model portfolio, citing a reduced perception of risk due to stability in some currencies and improving current accounts.
Macquarie remains “underweight” on Malaysia and India citing concerns about high levels of domestic debt and exposure to volatility in the global environment, respectively. (Reporting by Abhishek Vishnoi; Editing by Jacqueline Wong)