Across the region, Morningstar's ratings show the largest proportion of five-star stocks in the tech and consumer cyclical sectors, while stocks involved in basic materials have the worst ratings.
As the tariff war between the US and China escalates, the proportion of "five-star stocks" in Morningstar Equity Research's Asia coverage has increased to about 20% from 10% in the first quarter, says Kai Wang, Asia equity market strategist, signalling "more undervalued opportunities there".
According to Morningstar's five-tier scale, the rating not only means "appreciation beyond a fair risk-adjusted return is highly likely over a multi-year time frame", but also that the current market price "represents an excessively pessimistic outlook, limiting downside risk and maximising upside potential".
