Energy portal blocked! The Indian market becomes the first "sacrifice" under Middle Eastern geopolitical game. Morgan Stanley downgrades rating to "hold".

Notice that Morgan Stanley is taking a more cautious stance on Asian stock markets due to concerns that a disruption in the flow of oil through the Strait of Hormuz could disrupt the supply chain, potentially leading to a war involving Iran. They have also reduced their risk exposure to India. In a report dated March 5th, Morgan Stanley strategists including Daniel Blake and Jonathan Garner stated, "We maintain a defensive stance," "Asia remains heavily reliant on oil, refined products, and liquefied natural gas (LNG) supply from the Middle East, and we believe the market is too optimistic about supply chain risks." The strategists downgraded their rating on India from "overweight" to "equal weight" in their latest adjustment, noting that the country is one of the Asian markets most vulnerable to potential interruptions in supply of liquefied natural gas from Qatar. They also mentioned that considering the uncertainty and high valuations in the AI sector, global investors may choose to wait and see, perhaps turning back to India only after the tech cycle in South Korea and Taiwan peaks. This shift by Morgan Stanley highlights the increasing geopolitical risks as a result of the potential disruption of oil flow from Iran, and the rising risk premium. Prolonged disruption in the Strait of Hormuz could push up oil and LNG prices, putting pressure on energy-import dependent Asia and leading to downward revisions in profit forecasts. There are growing concerns in the market that continued supply shocks could lead to a slowdown in global economic growth, weakening key export industries. Global investors are withdrawing from major emerging markets in Asia. Since the start of the war, foreigners have pulled out around $13 billion from India, with relatively limited AI-related risk exposure. Meanwhile, larger outflows have been observed in China's Taiwan Province and South Korea, particularly in the semiconductor industry - with $16 billion leaving South Korea this week and about $7.9 billion leaving Taiwan.