Korean equity exposure reduction advised

The U.S. based financial group, Morgan Stanley, recently gave a recommendation to reduce positions held in Korean equities.

According to the Morgan Stanley`s `Asia Pacific Region Investment Strategy Report`, a recommendation was given to downwardly adjust the equity position in Korea from 11.3% to 9.3%.

Reasons provided for its recommendation were the weak Yen, a slowdown of the global economy and the contraction of Korea`s current account surplus.

The market capitalization of Korean stocks accounts for 14.3% of the total Asia-Pacific region market volume. The difference of 5% from the recommended holding ratio is the largest for the region.

Morgan Stanley advised to use the current upward momentum of the Korean financial market, which has transpired owing to the understanding that the Hyundai crisis has been solved, an anticipated merger of banks and the return of money to investment trusts, to reduce investment positions. On the other hand, Morgan Stanley adjusted its government bonds interest rate from 8.3% to 74.9% in a separate report.