TSMC shares jump 5% after Morgan Stanley says the chipmaker is a ‘top pick’

Taiwan Semiconductor Manufacturing Company, Limited at Hsinchu Science Park. Shares of the world’s largest chip maker Taiwan Semiconductor Manufacturing Company rose as much as 5% on Wednesday morning in Asia after Morgan Stanley recommended the stock.

Falling prices of tech products and logistics, reopening of economies, and a slower increase in production capacity for foundries will support a chip recovery.

The note said that investors should invest in industry leaders with pricing power, secular growth stories and companies that will benefit from China's Semiconductor Localization. Secular growth stocks are not dependent on the economy and have long-term value.

Morgan Stanley recommended overweighting on South Korea and Taiwan in a note on Asia's emerging markets.

Semiconductors and Technology Hardware dominate the two markets.

The worst point for the inventory cycle will be in the fourth quarter of this year and in the first quarter of next year. The inventory cycle makes its inflexion before stocks make their troughs.