Morgan Stanley strategist: US-Iran situation escalates again, suggests reducing holdings of Asian and emerging market stocks.

Morgan Stanley strategists said that the escalation of US-Iran tensions over the weekend and the new standoff in the Strait of Hormuz have reignited market risk aversion. Investors who reallocated their positions in Asian and emerging market stocks earlier this month should start reducing their positions. Strategists including Jonathan Gardner wrote in a research report, "We suggest clients who followed our advice to increase exposure to Asian and emerging market stocks at the beginning of this month should now moderately reduce their positions." They pointed out that the recent rebound potential of these assets is very limited, and the ceasefire situation is constantly changing. "As of the close of last Friday, most, if not all, of the losses in the March market have been recovered. For example, the emerging markets index has risen to 1600 points, matching the February levels, with only 6% upside potential left to our benchmark scenario target price." The strategists also warned that the ongoing escalation of geopolitical risks is a major short-term concern, with the market particularly focused on the timing of the ceasefire process.