People should be encouraged to invest in key Chinese stocks as the country’s latest economic data beat expectations, a global wealth manager says.
Tan Min Lan, head chief investment office APAC at UBS Global Wealth Management, expects Asian stocks to achieve growth of as much as 20 percent this year, as the coronavirus is believed to have peaked in many countries in the region.
Supported by government policies, China’s recovery from the pandemic should continue into the second quarter. Europe and the United State, however, may only return to a more normal economic situation by June, she said during a conference call on Tuesday.
Tan Min Lan, head chief investment office APAC at UBS Global Wealth Management, expects Asian stocks to achieve growth of as much as 20 percent this year, as the coronavirus is believed to have peaked in many countries in the region
Tan said China could provide the best example of what can happen in a country once the pandemic is brought under control. Currently, there is strong pent-up demand for smartphones, luxury goods, automobiles and real estate in China, she noted.
With global financial markets remaining volatile, UBS is bullish about consumer discretionary stocks, semiconductors, healthcare sector stocks and also shares which have a digital transformation theme.
The wealth manager said alternative investments will also play a bigger role - such as private markets, gold and bonds. UBS suggested investors have a globally diverse portfolio to seize the best opportunities.
Tan expects Asian markets may return to pre-crisis levels of financial activity by 2021.
In UBS’s Monthly Letter of April, the global wealth manager noted three economic phases of the pandemic which need to be considered by investors and global economies.
The first one is how quickly normalization is achieved including the resumption of work and restarting businesses. Phase two is how strong and quickly economies can recover and return back to pre-crisis levels; the third phase is dealing with a post-pandemic world - which will be more indebted, more digital and less global.
UBS believes some production of strategic supplies will become more local. This is because the virus has highlighted the need for robust supply chains - as have US-China trade tensions. But it may also mean a rise in automation and robotics.
On Monday, the US oil prices experienced a historic plunge to US$-37.63 per barrel as May contracts fell into negative territory, although this was followed by a rebound on Tuesday.
“We see both WTI and Brent at US$20 a barrel at the end of June, but expect a demand recovery in the second half of the year - with year-end targets of US$40 a barrel and US$43 a barrel, respectively,” Tan said.
The historic plunge also dragged down Asian stocks on Tuesday. Hong Kong stocks closed 2.2 percent, or 536.47 points lower at 23,793.55 today. Oil companies and airlines suffered major losses.
