Jonathan.Garner@morganstanley.comLaura.Wang@morganstanley.comCorey.Ng@morganstanley.comCrystal.Ng@morganstanley.comYinan.Zhang@morganstanley.comMORGANSTANLEYASIALIMITED+JonathanFGarnerEQUITYSTRATEGIST+8522848-7288LauraWangEQUITYSTRATEGIST+8522848-6853CoreyNg,CFAEQUITYSTRATEGIST+8522848-5523CrystalNgEQUITYSTRATEGIST+8522239-1468YinanZhang,Ph.D.QUANTITATIVEANALYST+8523963-3507AsiaEMEquityStrategyAsiaEMEquityStrategy||AsiaPacificAsiaPacificRaiseMSCIEMIndexTargetby8%to1,130AggressiveChinastimulus,alongerFedPause,positivesignsforUS/ChinatradenegotiationsandAsharesindexinclusionleadustoraiseourtargetsforMSCIEMto1,130(+8%vsspot)andAPxJto540(+3%).Whatwe'redoing:WeraiseourMSCIEMindextargetforend-2019from1,050to1,130(+8%fromcurrentlevels)andourMSCIAPxJindextargetbyslightlyless(UWAustralia)from520to540(+3%fromspot).WeleaveourTopixtargetunchangedat1,800(+12%fromspot).ForEM,weraiseour2020EPSforecasttoUS$98.4fromUS$95.1(consensusisUS$99.7)andourDec2019forwardP/Efrom11.0x(47thpercentile)to11.5x(59thpercentile).ReinvigoratingtheEMrally:WeremainOWEMequitiesinaglobalcontextandoutlinefivekeydriversofanotherpushhigher:1)wehaverecentlysignificantlyraisedourindextargetforMSCIChina(33%ofMSCIEMand31%ofAPxJ)by13%to93(+14%fromspot)andChinastimuluswaslargerthanexpected(e.g.JanuaryTSFandadirect~3pptEPSboostfrombroaderVATcuts,2)positivedevelopmentsonChina/UStradenegotiations,3)ourhouseviewofthenextFedratehikehasmovedfromJunetoDecemberwithalowerUSrealratesprofilethanbefore(helpfultoEMvaluations),4)incomingearningsseasondatawhichareslightlybetter(inlineonrevenues)thanfeared,and5)clearsignsofatroughformedincopperandinformationinFreightindices.Waystoplay:OurpreferredOWmarketsareBrazil,China,India,IndonesiaandSingapore.WeareUWAustralia,MexicoandPhilippines.WecontinuetoOWFinancialsandMaterialsandselectivecyclicalareas,suchasChineseAutoswhilstweareUWTelecomsandITHardware.Acrossourcoverage,ourpreferencehierarchycurrentlyisforCSI300,Topix,MSCIEM(countryallocationnotedabove),withMSCIAsiaexJapanlikelyt...
