Morgan Stanley just used Game of Thrones to explain which Australian stocks will feel the winter chill ahead

Game of Thrones/ IMDb
  • Researchers at Morgan Stanley Wealth Management are clearly fans of the hit TV show Game of Thrones.
  • In a note released this week, they used the show’s catchphrase, “Winter is coming”, to describe the Australian large cap stocks likely to feel the chill ahead.
  • It says many investor favourites are among those that are facing the toughest outlook

There’s no shortage of Games of Thrones fans out there, eagerly awaiting the final series of the hit TV show.

Nathan Lim, Alexandre Ventelon and Wayne Chatterjee, Researchers at Morgan Stanley Wealth Management, are clearly among them.

In a note this week, they said “Winter is coming” for several Australian large cap stocks ahead.

“We are big fans of a particular TV show that recently ended its latest season with the collapse of a giant impenetrable wall of ice at the hands of an undead army,” the trio wrote.

“The assault on the wall is a good metaphor for the attacks many of the Australian corporate giants have and continue to endure from many sides.”

Looking at the top 20 ASX listed stocks, they evaluate how each company is likely to fare in the period ahead, even offering alternative investment options abroad for those worried certain stocks and sectors will face a dragon-induced Armageddon ahead.

“We focus on the ASX’s 20 largest companies, plus one,” they say, adding the extra “one” is because Westfield has just agreed to be taken over by Unibail-Rodamco.

“The ASX20+1 represents about 60% of the weight of the ASX200 index. We believe it is a good reflection of the most significant portions of a typical Australian share portfolio.”

So which of these giants is likely to underperform in their opinion?

Here’s the list, including a brief rationale behind the view along with alternative investment options abroad.

Morgan Stanley Wealth Management Research

There are some big names on the list, including all of the big four banks. Past favourites such as Telstra, Wesfarmers and Woolworth’s are also expected to remain challenged.

However, it doesn’t believe all large cap Australian stocks face a similar outlook.

Here are the stocks they deem will have tailwinds looking ahead.

Morgan Stanley Wealth Management Research

And here are the stocks they are currently neutral on.

Morgan Stanley Wealth Management Research

“We conclude that while the ASX20 does not need to worry about a white walker invasion, the chill of change does hang heavy upon the market,” Lim, Ventelon and Chatterjee say.

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