Morgan Stanley cuts allocation to global equities, sees limited upside

Lower earnings, slower growth drive decision; other research and broking houses are also raising fears of slowdown in corporate earnings globally

Analysts at Morgan Stanley have turned little less optimistic on global equities and cut their allocation on this asset class from equal-weight to under-weight. Among all asset classes, they are now underweight in both equities and credit, equal-weight in government bonds and overweight in cash. Their most preferred asset class remains emerging market (EM) fixed income.

“Over recent weeks, you’ve heard us discussing why we think investors should fade the optimism from the recent G20. Why we think bad data should be feared rather than cheered because it will bring more central bank easing. Why we think the market is