US investment bank JP Morgan said it is “bullish on Asian equities” which could be boosted by a recovery in global tech demand and companies resuming investments.
South Korean and Indian equities, in particular, are positioned to perform particularly well going into 2020 and could “surprise” investors, according to JP Morgan’s head of Asia ex-Japan equity research James Sullivan.
“We’re looking at an MSCI Asia ex-Japan index target of 750 at the end of [the] first half (of 2020). Year end, however, we’re looking at 700,” Sullivan told CNBC.
Still, JP Morgan’s 2020 year-end target for the index (which tracks large and mid-cap stocks across Asian markets, including China, South Korea, and India) is roughly eight percent above current levels.
Investors are rotating out of bonds into equities, and out of growth stocks into value, Sullivan said, noting that South Korea is “reasonably well-positioned” for both of those changes. The region has been under-performing and is one of the best value markets globally, he added.
“It’s one of the markets that we have a key overweight going into year-end as well as early next year.”
South Korean tech stocks could do well as demand heats up, according to the expert.“Names like Samsung that we’ve seen strong performance (from) are on our top picks list, as we go through the first half of next year.”
With regards to India, he said domestic policies could help drive stocks higher.“We’re seeing an impulse of fiscal stimulus. We’re starting to see a bottoming out of earnings negative revisions that we’ve seen for the past year and a half now,” Sullivan explained.
He also said that JP Morgan has an “overweight” rating on cement manufacturer Ultratech Cement and ICICI Bank. Ultratech is positioned for “strong earnings growth,” while ICICI’s valuation is “attractive relative to its private banking peers.”
Source: RT