JPMorgan strategist on the best time to buy Asian stocks
SINGAPORE – The best time to buy Asian stocks might be now, a JPMorgan strategist said on Wednesday.
Mixo Das, Asia’s equities strategist at the bank, said US markets have hit record highs as Europe and Japan approach all-time highs. However, Asian markets have not seen the same trend.
“Since the February highs, Asian stocks have fallen dramatically and the way we look at them, our executive tells us this is probably the best time to take risks in Asia,” he told CNBC. “Squawk Box Asia.”
Das said investor positioning in Asia is currently “extremely, extremely light” as valuations have fallen to more normal levels. If macroeconomic dynamics in the region start to stabilize, Asian stocks could move much higher, he added.
The strategist said second-quarter Asian business profits could rise 60% to 70% from a year ago, broadly in line with estimates.
Covid effect and vaccination
Parts of Asia such as South Korea, Indonesia and Malaysia are grappling with an increase in Covid-19 infections as immunization progress lags behind countries like the US and UK
Das said investors have become used to seeing new waves of Covid cases. He cited the example of India, where a “disastrous wave” of infections at the start of the year did not rock the stock market as investors realized the country’s long-term fundamentals would likely remain intact. .
But the spread of a more transmissible delta variant and relatively low vaccination rates across Asia could weigh on stocks that would benefit from the economic reopening, Das said. These actions include those in the hospitality, leisure and travel sectors, he said.
The strategist added that JPMorgan prefers stocks sensitive to changes in interest rates, such as banks. His comments come as the US Federal Reserve has raised its inflation expectations and brought forward the timetable for which it will hike rates.
Chinese tech stocks
Regarding opportunities in China, Das said technology stocks are always a “buy” for investors with a long-term horizon. He explained that Chinese tech companies still have growth prospects, although the pace of growth may slow due to tighter regulatory control from Beijing.
Shares of large Chinese internet companies, including Tencent and Alibaba were hit as Beijing tried to curb monopoly business practices and regulate data collection and use.
“If you look at the valuation of these names against comparable stocks around the world, it’s ridiculously cheap right now,” Das said, without specifically naming Chinese tech stocks.
“We are seeing inquiries from long-term patient investors starting to look at these names and wonder if this story is still going to play out in five, 10, 15 years. And the answer is generally yes.”