These commodity stocks could win big as China moves to boost its struggling real estate sector and economy, according to Morgan Stanley. The picks from the investment firm come after China's central bank laid out plans to support a lagging housing market and said it would slash the amount of cash needed on reserve for banks as the second-largest economy contends with weak demand and a growth slowdown. Morgan Stanley's team believe these measures display a heightened "sense of urgency" and signal that China is "taking deflation seriously.
" "While our China property analyst, Stephen Cheung, would like to see more details on the policy and its implementation to assess the potential fundamental impact, he believes possible measures may boost home sales and soften the decline in home prices in the near term," wrote equity analyst Carlos De Alba in a Thursday note referencing his metals and mining "shopping list." Against this backdrop, the firm sees a positive setup for metals and mining stocks that have underperformed the S & P 500 by 25 percentage points since May. The sector could also get another boost with more policy action later this year.
"Amid elevated macro uncertainty, we favor M & M equities with near-term catalysts and/or those leveraged to copper given the metal's persisting supply challenges," he said. Here are some of the names that could benefit from China's stimulus: Within the mining sector, Morgan Stanley names Freeport-McMoRan and Alcoa among its top picks, wi.
