"Morgan Stanley picks \u2018regional champions\u2019 and stocks most pressured by the supply chain crisis"

" \n Morgan Stanley picks \u2018regional champions\u2019 and stocks most pressured by the supply chain crisis \n \n\n \n Morgan Stanley said most acute supply chain disruptions are already easing and will be more fully resolved within the first half of 2022. \n \n\n \n That\u2019s the base case the investment bank laid out in a recent report assessing the global supply chain, its risks and chokepoints. \n \n\n \n This year\u2019s supply chain crisis has hit companies hard as bottlenecks built up and industrial production failed to meet a post-pandemic spike in demand.\u00a0 Energy shortages in China and Europe , as well as Covid-related lockdowns, have contributed to the huge squeeze in supply chains. \n \n\n \n Supply chains remain vulnerable, especially as the world is still assessing the risk of new omicron strains , Morgan Stanley said. \n \n\n \n \u201cHowever,\u00a0 orders have surged \u00a0amid anxiety about sourcing product, thus inflating backlogs and setting the scene for a sharper than-expected short-term unwind, particularly for consumer electronics and segments facing demand destruction risk,\u201d the bank\u2019s analysts wrote in the Dec. 14 report. \n \n\n \n Logistics costs will remain \u201csignificantly higher\u201d and will be \u201cpersistent through 2022,\u201d Morgan Stanley predicted. \u201cQuarantine and travel restrictions are unlikely to be eased for key transcontinental routes in a coordinated fashion through 2022, with little new capacity until late 2023.\u201d \n \n\n \n For companies producing tech hardware, Morgan Stanley is cautious on those with elevated levels of backlog as well as limited visibility into when demand will return to normal. It says it prefers semiconductor firms exposed to autos and industrials. \n \n\n \n Stocks most crucial to supply chains \n \n\n \n The investment firm identified companies it says are \u201cregional champions,\u201d \u201crecognizing their importance to supply chains and the role that policymakers may play \u2026 to support their position against competitive pressures from other spheres of influence.\u201d \n \n\n \n \u201cThese companies have indeed featured prominently through the global supply chain challenges of 2020\/21, but in broad terms we have also seen them show stronger profitability trends and significantly outperform the MSCI ACWI global equity benchmark,\u201d the report said. \n \n\n \n The MSCI ACWI index is comprised of stocks under the MSCI world as well as emerging markets indices. \n \n\n \n These are the top stocks that Morgan Stanley says are most \u201ccentral\u201d to supply chains. \n \n\n \n Tech hardware:\u00a0 Apple ,\u00a0 HP ,\u00a0 Cisco ,\u00a0 Lenovo ,\u00a0 Fujitsu ,\u00a0 Hitachi Semiconductors: Samsung Electronics,\u00a0 Intel ,\u00a0 Infineon Technologies ,\u00a0 NVIDIA Autos and components:\u00a0 Volkswagen ,\u00a0 Ford Motor ,\u00a0 Daimler ,\u00a0 General Motors ,\u00a0 BMW ,\u00a0 Tata Motors ,\u00a0 Renault , Hyundai Motor,\u00a0 Continental Software:\u00a0 Microsoft ,\u00a0 IBM ,\u00a0 Dell , SAP Insurance:\u00a0 Berkshire Hathaway Consumer:\u00a0 Sony ,\u00a0 Panasonic , LG Electronics Retail:\u00a0 Amazon Capital goods: Volvo AB,\u00a0 Siemens \n \n\n \n Firms squeezed by bottlenecks \n \n\n \n Morgan Stanley also listed the companies it said were most pressured by supply chain bottlenecks. \n \n\n \n \u201cIndustries that fall into this category are ones that most acutely transmit the squeeze of supply chain pressures, partially because the companies within this cohort face persistent reliance on labor inputs in spite of increased automation or capital investment,\u201d the firm said. \n \n\n \n Coupled with other factors such as a reliance on markets subject to trade or other policy frictions, this \u201cleaves such companies vulnerable to geopolitical and labor dynamics, but also crucial to global supply chains,\u201d it said. Some examples include container shipping and semiconductor firms. \n \n\n \n Such firms may be facing cost pressure, but they still hold pricing power by virtue of their industry position, according to Morgan Stanley. \n \n\n \n These are the stocks that fall under the \u201cbottleneck\u201d category. \n \n\n \n Semiconductors:\u00a0 Infineon , ST Microelectronics,\u00a0 NXP Semiconductor ,\u00a0 Microchip Technology ,\u00a0 Texas Instruments ,\u00a0 Analog Device ,\u00a0 ON Semiconductor ,\u00a0 Globalfoundries , Nuvoton Technology, Nanya Technology Tech hardware:\u00a0 BYD Electronics ,\u00a0 Wingtech Technology ,\u00a0 Unimicron ,\u00a0 Kinsus Interconnect Tech ,\u00a0 Nan Ya PCB Networking equipment:\u00a0 Lumentum ,\u00a0 II-VI ,\u00a0 Corning ,\u00a0 CommScope \n \n\n \n \u201cIn the face of disruptions and capacity constraints, there are limited options except to raise prices to compensate for higher input costs or to ration capacity through backlogs,\u201d Morgan Stanley said, of such firms facing bottlenecks. \n "

"Morgan Stanley picks \u2018regional champions\u2019 and stocks most pressured by the supply chain crisis"

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