Morgan Stanley recommended "cheap" stocks in South Korea and China and advised reducing holdings in Southeast Asia after rallies drove indexes in Indonesia, the Philippines and Malaysia to record highs.
China's stocks fell, dragging the benchmark index down for a second day, on concern rising consumer prices and surging fund flows may spur the government to boost interest rates and increase capital controls.
Chinese stocks fell Wednesday as investors turned cautious ahead of Thursday's release of October inflation data.
Hong Kong stocks closed down 209. 99 points, or 0.85 percent, at 24,500.61 on Wednesday.
The ChiNext Index, launched by the Shenzhen Stock Exchange (SSE) on June 1, added 25.93 points, or 2.33 percent, to close at record high of 1,141.58 on Wednesday.
China's stock index futures closed down Wednesday with the contract for November, the most actively traded, down 0.44 percent from the previous trading day to end at 3,525.8 points.
The central parity rate of renminbi, or China's currency yuan, strengthened 130 basis points Wednesday to 6.6450 per US dollar, according to the data released by the China Foreign Exchange Trading System.
China sold a net 769.2 billion yen ($9.5 billion) of Japanese bonds in September, the second straight month to cut holdings as the currency approached a 15-year high.
China's stock index futures closed down Tuesday with the contract for November, the most actively traded, down 0.79 percent from the previous trading day to end at 3,545.4 points.
The ChiNext Index, launched by the Shenzhen Stock Exchange (SSE) on June 1, added 8.59 points, or 0.78 percent, to close at 1,115.65 on Tuesday.
Weak heavyweights dragged China's stocks down from a seven-month high Tuesday, as investors turned cautious on rising inflation concerns that might trigger monetary policy tightening.
The central parity rate of renminbi, or China's currency yuan, strengthened 112 basis points Tuesday to 6.6580 per US dollar, according to the data released by the China Foreign Exchange Trading System.