Light equipment at the Guangzhou 2020 International Live Broadcasting Industry Expo on December 27, 2020.
Photographer: VCG through Getty Images
Photographer: VCG through Getty Images
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Then closely surpassing its US counterparts for the first time in three years by 2020, Asian stocks could see another strong year, analysts say.
Asia’s top performance is surpassed to continue in 2021, and cyclical is expected to be achieved Until technological stocks as optimism about vaccine launches grows. Analysts predict, on average, that the MSCI Asia Pacific index will rise by about 9% over the next 12 months, compared to an estimated 8% gain for the S&P 500 index, according to Bloomberg polls.
Strengthened economic reinforcement in the low valuations of China and Asia in relation to the United States and Europe are also key positive aspects that are helping regional populations to overcome the potential risks arising from new virus outbreaks, barriers to distribution of vaccines and worsening Sino-US relations.
“Asian equities will be the preferred asset class in 2021,” said Gary Dugan, CEO of the CIO Global Office in Singapore. “The fundamentals of growth and the ability to bounce back quickly as Covid’s problems become clear make the region particularly attractive.”
The S&P 500 it sank further since late October on Monday as investors assessed the possibility of a slower-than-expected economic recovery amid a global rise in Covid-19 infections. However, the MSCI Asia Pacific indicator rose 0.2% on Tuesday.
Here are five topics that Asian investors consider key to their 2021 strategy:
Green is good
Investment in environmental, social and governance reasons should benefit, thanks to a number of favorable government policies.
Take renewable energy, for example. China, Japan and Korea are pushing for it to happen carbon neutral this century, as the United States prepares to take on a climate-friendly president.
“Renewable energy has never been cheaper,” said David Smith, portfolio manager at Aberdeen Standard Investments Asia. “China’s recent promise to be a zero net emitter of greenhouse gases by 2060 has added a boost to the case.”
Stocks linked to solar and wind energy could increase as China improves its climate goals. Meanwhile, India expects 40% of its power generation to come from non-fossil sources by the end of the decade, which should help companies in this space.
Electric vehicles are still hot. BNP Paribas’ energy transition fund is among them betting on shares of the electric vehicle supply chain, which includes Korean battery manufacturers such as LG Chem Ltd. and companies dedicated to hydrogen fuel cell technology. Japan’s car stocks are concentrated as the country prepares to do so phase out new gasoline cars by the mid-2030s.
It’s really the turn of value
Stock stocks have lagged behind and recovered over and over again over the past decade, but this time, investors expect a stronger recovery from stocks that appear to be cheap in measures such as income price or prices. of the books. Except for widespread blockades, the rise in shares of the former economy that were shunned by investors approaching pandemic games such as technology and healthcare is expected to continue.
Investors seeking exposure to companies that will benefit as business activity normalize collect discretionary shares from banks, industry and consumers, heavyweights of the MSCI Asia Pacific Index. There are funds from BlackRock Inc. to UBS Asset Management promoting actions in Southeast Asia and India as part of its recovery game book.
Not only sectors could benefit from turnover in value; cheap markets can also win.
Analysts estimate that the Singapore Straits Times index, Asia’s largest national gauge last year, could gain 10% over 2021, driven by the world’s largest regional trade firm pact late last year.
Another market that shunned but is receiving love: Japan. Foreign investors are seen returning to Japan’s cyclical heavy stock market, bolstered by Warren Buffett’s $ 6 billion bet on the nation’s trading houses and expectations of policy changes under Prime Minister Yoshihide Suga.
These are the winners and losers of the Japan 2020 stock market
Technology is still your friend
This is not to say that technology, the hottest trade of 2020, will be put into operation. The pandemic has accelerated trends such as e-commerce and teleworking, which means Taiwanese and Korean chip makers, internet names in China and data center stocks are a favorite of the new year.
M&G Investments is among the asset managers investing in game content developers in Japan, Korea and China. Nintendo Co., the creator of the hit game Animal Crossing, rose 50 percent last year, while Sony Corp., known for the Playstation console, rose 39 percent.
Japan’s technological stocks are also set at benefit from the Suga administration’s digital reform agenda aimed at transforming the inefficient and heavy public sector of the country’s role.
That said, there is a caveat to this trend: regulation. China has intensified its examination of the internet empire of billionaire Jack Ma, and initiated an investigation into alleged monopolistic practices at Alibaba Group Holding Ltd., and also ordered subsidiary Ant Group Co. review their operations.
Concerns that antitrust scrutiny will do they extend beyond what Ma companies have weighed on the shares of Alibaba and its rivals like Tencent Holdings Ltd. and food distribution giant Meituan.
China fines Alibaba, Tencent unit under antitrust laws
The dividend drought should end
Dividend shares are expected to return in 2021 as companies loosen their stock market chains. Another catalyst is the easing of regulatory bands that banks pay to pay off capital in the midst of the pandemic.
Payments to Australian and Thai lenders could grow after the the removal of related restrictions, and the same goes for dividends to HSBC Holdings Plc and Standard Chartered Plc after the UK eased his ban. Singapore banks, which have long had a reputation for being generous with payments, could be back in play once the country the regulator remains the same.
Double-digit increases in Asian dividends “are more than possible,” said Mike Kerley, portfolio manager at Janus Henderson Investors.
Banking is not the only space investors observe here. Kerley claimed that stocks of materials, such as Australian miners earning with a commodity price boom, as well as consumer discretionary stocks
China’s waste returns
After a link chain By default in state-linked companies, China is once again focusing on stabilizing debt levels and tightening the liquidity of its financial system.
This is bad news for Chinese brokers – a source of margin funding and a barometer of stock market sentiment. Companies listed on the high-tech ChiNext Panel in Shenzhen, and other small-cap stocks in the country, may also face sales pressures as they are vulnerable to the system’s liquidity outflow.
China tells inefficient companies to harden or prepare to fail
However, beyond the short term pain, the baffling trend is likely to lead to better asset quality in Chinese banks, which will boost their shares. Investors will watch for clues to deleveraging plans at the annual meeting of China’s National People’s Congress in March.
– With the assistance of Amanda Wang and Sofia Horta e Costa
(Estimated updates in the second paragraph, performance of the Asian index in the fifth paragraph.)