Morgan Stanley strategists indicated that due to the escalation of US-Iran tensions over the weekend and a renewed standoff in the Strait of Hormuz, market risk aversion has reignited. Investors who recently increased their positions in Asian and emerging market stocks earlier this month should now begin reducing their holdings.

Strategists, including Jonathan Gardner, wrote in a research report: "We advise clients who followed our recommendation to increase exposure to Asian and emerging market equities at the beginning of the month to moderately reduce their positions." They noted that the recent rebound in related assets has limited upside potential, and the prospects for a sustained ceasefire remain uncertain.

"As of Friday's close, most, if not all, of the losses from the March downturn have been recovered. For instance, the emerging markets index has rebounded to 1,600 points, matching levels seen at the end of February, leaving only about 6% upside to our base-case target price."

The strategists also highlighted that escalating geopolitical risks are the primary short-term concern, with markets paying close attention to the timeline for a potential ceasefire between the involved parties.