In its emerging markets survey released on Friday, US investment bank Morgan Stanley raised its recommendation on Israeli domestic equities to "Overweight", but cut its recommendation for Israel Tech to "Neutral".
The analysts at Morgan Stanley Equity Research say that the Israeli market is "the cheapest on a forward, risk adjusted basis," adding "We are thinking that the market will move back to an 'ERP and value' based framework as a correction, as opposed to the 'IRR and growth' theme that has driven market since October."
Morgan Stanley adds Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA ; TASE: TEVA) to its portfolio, saying that it "provides a sectoral element of defensiveness."
Other domestic or dual-listed Israel stocks in Morgan Stanley's EMEA model portfolio are Israel Chemicals (TASE: CHIM), Bank Leumi (TASE: LUMI), Bank Hapoalim (LSE: BKHD ; TASE: POLI). Among Israeli companies traded in New York, Morgan Stanley includes Check Point (Nasdaq: CHKP) and M-Systems Flash Disk Pioneers (Nasdaq: FLSH).
As far as emerging markets in general are concerned, Morgan Stanley recommends reducing exposure, and downgrades Turkey and South Africa Materials to Underweight", although Russia's "Overweight" rating remains.
Two weeks ago, Deutsche Bank downgraded its rating for the Israeli market to "Underperform", while UBS came out with a "Neutral" rating.
Published by Globes [online], Israel business news - www.globes.co.il - on February 12, 2006