According to Morgan Stanley, the power industry is undergoing a transformation that will benefit multiple power producers, grid operators, and utilities. “Electricity demand is surging, prices are volatile, and the cost of producing clean electricity is expected to fall by a third worldwide from 2023 onwards,” analysts at the investment bank wrote in an Oct. 23 note. “This is even more pronounced in Asia.” “Global electricity markets are bringing surprises on many fronts, and investors are navigating a new normal for the electricity value chain,” they added. Analysts say that despite increasing demand for electricity around the world, investors are not factoring it into their investment decisions because they are “not yet accepting that this is the new normal.” he pointed out. Morgan Stanley is also focusing on renewable energy, which it says is “interesting” but “more risky than before in several regions due to consumer competition and grid constraints.” It is said that Morgan Stanley analysts named three global stocks in the power sector with overweight ratings, saying they have room for gains of more than 40%. RWE RWE: Morgan Stanley said the German power generation and trading giant is exposed to “tight power markets that reward flexibility and value creation in renewable energy in Europe and the United States.” RWE is listed on the Frankfurt Stock Exchange and trades in the United States as American Depositary Receipts (ADRs) under the ticker RWEOY. The investment bank has a price target of 50 euros ($54) for the stock, giving it an upside of about 60%. AES Corp. AES Corp.: Morgan Stanley highlighted the company’s “expanding its renewable energy portfolio” as a theme to watch. This U.S.-based energy company operates in the utilities and power generation businesses. The investment bank has a price target of $25, giving the stock an approximately 46.4% chance of upside. Tenaga Nasional Tenaga Nasional: Malaysia’s state-owned utility has attracted Morgan Stanley’s attention given its exposure to “a single grid operator benefiting from electricity demand and capital investment in renewable energy grids.” I am collecting. Tenaga is listed on Bursa Malaysia and traded as an ADR in the US Tenaga shares are also included in the iShares MSCI Malaysia ETF (6.7% weight) and the GlobalX FTSE Southeast Asia ETF (2.3%) Morgan Stanley’s price target is 20.60 Malaysian dollar ringgit ($4.74), giving it a potential upside of nearly 46.5%. —CNBC’s Michael Bloom contributed to this report.
