MEXICO CITY (Dow Jones)--Morgan Stanley lowered its recommended stock market weightings for Brazil and China Friday, while raising its weightings for Mexico, Israel and Malaysia.
As part of a monthly re-weighting for its emerging-market equity recommendations, the firm said the changes reflect positioning "for increased volatility rather than the one-way market of recent months."
Morgan Stanley also reduced the overall size of its risk positions, "as we consider that market conditions will likely be more turbulent over the next several weeks than the one-way bull trend of the last four months."
Among country weightings, Morgan Stanley cut its recommendation on Brazil to equal-weight from overweight and China to underweight from equal-weight.
"Notwithstanding our medium to long-term bullish outlook for equities in both countries," the firm said both China and Brazil had outperformed the firm's MSCI EM index so far this year.
Morgan Stanley raised Israel and Malaysia to overweight from equal-weight, with Mexico rising to equal-weight from underweight.
Those markets "should perform well if the more tactically challenging environment we anticipate materializes going forward," it said.
Among smaller markets, Poland was cut to equal-weight from overweight, the Czech Republic was lowered to underweight from equal-weight, and the Philippines was raised to equal-weight from underweight.
-By Tom Barkley, Dow Jones Newswires; (5255) 5080-3451, firstname.lastname@example.org