almost 4 years ago • 2 mins
With the Chinese economy exhibiting early signs of a rebound on Tuesday, several big investors’ thoughts are already turning to how a recovery from the coronavirus might affect stocks in Asia 😋
Many Asian markets have, like the rest of the world, suffered their worst quarter since at least the last financial crisis. But the mini-manufacturing revival in China – where the virus first emerged – makes CMC Markets think the country’s government will soon focus on reviving consumer activity as well. That’d likely boost retail and consumer goods companies operating there, as well as tech firms working in 5G, gaming, and cloud computing.
Stocks look shakier where the coronavirus is less far advanced. The Singaporean economy is concentrated on exports and tourism – and those industries are unlikely to return to normal anytime soon. Aizawa Securities also expects Japanese stocks to fall further if a full lockdown is imposed there – although there may be a few long-termist exceptions, such as Toyota and Takeda Pharmaceutical.
While Indian and Australian stock markets posted their worst quarters ever, the good news for Asia-focused investors is that the average company share price across the continent is now just 10.6 times next year’s earnings. That’s the lowest “price-to-earnings” valuation since 2012 – and it could present a buying opportunity, at least in certain countries 👀
The Philippines, for example, has a way to go to beat the virus – but UBS sees companies providing grocery and telecoms services there doing well, with banks also expected to quickly bounce back once things normalize.
On the other hand, Citigroup sees volatility persisting in India, where the government may struggle to look after its 1.4 billion population and smaller stocks could suffer cash shortages. And even China isn’t out of the woods yet. Investor trading on the country’s stock exchanges has fallen 60% recently – which could lead to a rapid reversal of companies’ fortunes…
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