(Yicai Global) Nov. 29 -- European banks and energy company stocks are strong picks for 2023 amid rising interest rates and higher energy prices, a portfolio manager in the global multi-asset team at US investment management firm Morgan Stanley said at an event today.

One important theme in investment is the higher opportunity for income by readjusting portfolios, Andrew Harmstone said at the 2022 Shanghai Global Asset Management Forum, co-hosted by Yicai Media Group and Bank of China. Investors used to have no alternative equities, but now it makes sense to focus on some alternatives for diversification purposes.

For example, European banks are actually in quite an attractive position right now, said Harmstone, who is also head of the New York-based firm’s Global Balanced Risk Control strategy. Their valuations are attractive and rising interest rates tend to boost profitability, making it one area that investors should at least consider.

Brazil and Mexico have led the way in raising interest rates substantially so they could also be an interesting place to look, said Harmstone, who is also head of the Global Balanced Risk Control strategy.

Another area to watch is the energy sector, Harmstone said. Despite the current turmoil, long-term trends would support higher energy prices. Decarbonization and the possibility that countries will rely less on foreign imports, especially from Russia, would result in higher energy prices in the long run.

Another investment theme is the higher opportunity for income by readjusting portfolios. Harmstone said. Investors used to have no alternative equities, but now it makes sense to focus on some alternatives for diversification purposes.

Editors: Shi Yi, Kim Taylor