Morgan Stanley expects its pick of five Asian stocks to rise more than 50% over the next 12 months. Wall Street banks are bullish on a range of Asian stocks as the broad MSCI Asia-Pacific index has entered a new bull market, up 25% from its October lows. The composition of pan-Asian stock markets is changing rapidly, the investment bank said. Morgan Stanley sees Japan as an outperformer, especially in large-cap stocks, as the country’s stock market currently has an investable market capitalization of more than $3.5 trillion, more than any other market in the region. That puts China in second place – with a market capitalization of about $2 trillion, only about twice that of India. The table below highlights five of Morgan Stanley’s Buy-rated stocks with the greatest upside potential. Alibaba Chinese tech giant Alibaba Group, also listed in the U.S., has made significant progress in its restructuring process, according to Morgan Stanley. Earlier this year, it announced plans to overhaul its organization and split it into six divisions to reassure investors that the company can be “flexible” to market changes. According to analysts at Wall Street banks, Alibaba’s shares are expected to rise 62% over the next 12 months. The stock is also the bank’s top pick in China’s Internet space. “The latest restructuring progress and faster-than-expected pace of capital management are encouraging,” Morgan Stanley analyst Gary Yu wrote in a note to clients on May 29. Acceleration means 30 percent returns to shareholders.” Astellas Pharma Morgan Stanley is also bullish on Japanese drugmaker Astellas Pharma. The bank expects shares of Astellas to rise 66% over the next 12 months as the company plans to challenge a recent US court decision. The decision invalidated patents related to the formulation of mirabegron, a drug used to treat overactive bladder. The decision will allow other pharmaceutical companies to produce generic versions of the drug. The patent is a key part of Astellas’ mid-term business plan. “The likelihood of imminent launch of a generic drug in May 2024 is low,” Morgan Stanley analysts Shinichiro Muraoka and Jaeheon Lee said in a June 12 note to clients. Much larger potential adverse effects than patent issues. Sea Morgan Stanley sees long-term potential in Sea Limited despite inflation and the challenges of reopening the economy post-pandemic. Shares of the Singapore-based technology company could rise as much as 67%, according to analysts at the bank. The bank noted that the company’s long-term structural opportunities continue to exist, especially with low e-commerce penetration. JD.com Morgan Stanley has highlighted the potential growth of JD.com, China’s leading e-commerce company, as Chinese consumer spending picks up. The investment bank expects the total value of all goods sold through its platform to re-accelerate from the second quarter of this year. It also expects margins to remain resilient thanks to JD.com’s growing merchant and user base. Morgan Stanley analysts led by Eddy Wang said in a note to clients on June 6: “Thus, in our view, JD.com’s current share price and valuation level are very attractive for long-term investors. “Big Chinese insurers expect a more favorable business environment against the backdrop of China’s reopening. “Coupled with potential reform benefits, management believes the worst is over and business will pick up from now on,” said Jenny Jiang, an analyst at the bank. The report also indicated that the Covid-19 pandemic had minimal impact on the company and that its investment in real estate was not as large as thought.