The coronavirus-wrecked equity markets of China, Singapore and Australia can now provide shelter from the outbreak, according to Morgan Stanley.

The investment bank upgraded stocks of the three nations in its model allocation for Asia Pacific and emerging markets on Sunday, citing expectations of further policy stimulus amid the widening public health emergency and cheaper relative valuations.

Following the worst week in two years, Asia stocks rebounded on Monday as investors drew optimism from the pledges of stimulus by global central banks. The Bank of England and the Bank of Japan on Monday promised action for market stability following the Federal Reserve indication on Friday that it was ready to cut rates.

“We move to overweight on China and Singapore, equal-weight on Australia for relative resilience,” strategists including Jonathan Garner wrote in a note dated Sunday. The bank is “boosting positions for defence/quality and incrementally for stimulus beneficiaries,” according to the note.

China pledged to roll out more effective stimulus -- including implementing measures to reduce corporate taxes and cut unnecessary government expenses. Singapore last month announced its most-expansionary budget since 1997 to combat the virus. In Australia, the central bank is all-but certain to cut interest rates Tuesday.

The virus outbreak will deepen the downturn in economic growth and drive stronger policy reaction, Morgan Stanley wrote in the note. Governments and central banks will either remain accommodative or come out with more stimulus measures if the disruption caused by the virus extends into the second or third quarter of this year, it added.

Meanwhile, the investment bank downgraded the equity markets of South Korea -- citing slowing in consumption -- and those of Russia and Greece to reduce the risk in overall allocation framework, the note added.