Morgan Stanley: Asia is ready to seize the opportunity of the global surge in AI capital expenditures, listing the latest focus stocks in the region.

Morgan Stanley released a research report stating that the Asia-Pacific stock market continues to benefit from the skew in indices towards computing, commodities, and capital goods. The surge in capital expenditure on artificial intelligence is driving profit growth for AI enablers, but the bank also sees broader capital expenditure projects covering defense and economic security sectors driving opportunities in industrial and commodity sectors. The report states that Asia has an upstream advantage and is ready to capture the benefits of the global surge in AI capital expenditure, as well as the rising trend of public spending in energy security and defense sectors. Breaking down by economic risk exposure group, the bank found that over 50% of the weight in the Asia/Emerging Markets index comes from computing (semiconductors/hardware), commodities, capital goods, and physical assets. Profit growth in the computing sector remains strong, but valuations and holdings have also correspondingly increased. The bank points out the attractiveness of cyclical sectors and, unlike peers, maintains an "overweight" position in the commodities sector, which also benefits from the supercycle of capital expenditure and has valuation support compared to historical levels and other sectors. At the same time, the capital goods sector has strong long-term prospects, but the bank notes that median valuations are similar to the computing sector, while three-year growth expectations are lower. From a strategic perspective, the bank still has an "overweight" view on the industrial sector, but will continue to work with its key industry teams to identify potential opportunities. Morgan Stanley's latest list of focus stocks in the Asian region includes: Taiwan Semiconductor Manufacturing Company (2330.TW) Samsung Electronics (005930.KS) Tencent Holdings (00700) Contemporary Amperex Technology (300750.SZ) Delta Electronics (2308.TW) AIA Group (01299) Mitsubishi Heavy Industries (7011.JP) NAURA Technology Group (002371.SZ) Larsen & Toubro Ltd (India) Doosan Heavy Industries & Construction (034020.KS) WuXi AppTec (02359) Hanwha Aerospace (012450.KS) Fanuc Corporation (6954.JP) Hyundai Electric & Energy Systems (267260.KS) Shenzhen Inovance Technology (300124.SZ) Taiwan VEC Technology (6669.TW) Gulf Energy Development PCL (Thailand) ST Engineering (Singapore) Sieyuan Electric Co. (002028.SZ) Hitachi Cable (5801.JP) Taisei Corporation (1801.JP) Lynas Rare Earths Ltd (Australia) Nippon Reinz (2768.JP) GS Yuasa Corporation (6674.JP) GemLife Communities Group (Australia)