Morgan Stanley has identified three Asia Pacific stocks as “high conviction” and actionable trade ideas. The stocks are Japan-listed Renesas Electronics , Australia’s Macquarie Group , and India’s ICICI Bank . According to the Wall Street bank, the trade ideas are effective for 13 weeks from July 30, when they were first shared in a note to clients. The bank said the three stock ideas highlight “actionable, high-conviction calls” made by its equity research team in the preceding week. However, it cautioned that investors should not interpret these stock ideas as portfolios. “Concepts important to a balanced portfolio, such as negative correlation and diversification, have not been considered. Treating ‘Three Actionable Ideas’ ideas as a portfolio will subject you to the risk of losing all or a substantial portion of your investments,” the bank said. Renesas Electronics Morgan Stanley analysts expect shares of Renesas Electronics, one of the largest semiconductor companies in the world, to rise by more than 27% over the next 12 months to 3200 yen ($22.40). The Wall Street bank’s analysts believe the company’s stock is currently undervalued by the market, despite having risen by more than 100% this year. The analysts said their conviction is “based on ~10% discount to comparable companies ( NXP , STMicro and Microchip ),” among other factors. The consensus price target from analysts compiled by FactSet points to a 21.8% upside from the current share price of 2,504 yen. The stock is also traded in the U.S. over the counter. 6723.T-JP 1Y line Macquarie Group The investment bank expects shares of Macquarie Group, one of the largest infrastructure asset management firms, to rise by more than 19% over the next 12 months to 209 Australian dollars ($137). Morgan Stanley said its price target was probability-weighted, giving 30% to its bull case and 60% to its base case scenarios. The bank said the skew towards a bullish sentiment “reflects [Macquarie Group’s] structural growth options in renewables, infrastructure & private market.” Analysts’ consensus price target, as compiled by FactSet, points to a 9.1% upside from the current share price of 175 Australian dollars. The stock is also traded in the U.S. over the counter. MQG-AU 1Y line ICICI Bank Morgan Stanley analysts expect shares of ICICI Bank, one of India’s largest privately held lenders, to rise by nearly 40% over the next 12 months to 1350 Indian rupees ($137). The investment bank last week upgraded Indian stocks as a whole to “overweight” from “equal weight,” citing a solid profit outlook and the country’s attractiveness to investors in a “multipolar world.” The consensus price target of analysts, as compiled by FactSet, points to a 21.6% upside from the current share price of 970 Indian rupees ($11.70). The stock is also listed in the U.S. and has a buy rating from 37 out of 40 analysts covering the lender. ICICIBANK-IN 1Y line — CNBC’s Michael Bloom contributed to this report.
