Citibank vurderer, at der stadig er et stort potentiale i asiatiske aktier, selv om de er steget kraftigt i årets løb. Potentialet er størst i cykliske aktier og i value-aktier. Mindre og mellemstore aktier har klaret sig bedre end de store, og det gælder især i Kina.
Going Cyclical in Asia
Investors in Asia have flocked to COVID-19 defensive or growth sectors like technology this year. These companies have benefited from stronger demand due to social distancing and excess liquidity.
While Citi analysts believe in their ability to potentially generate solid long term growth, they also see valuations as more fully priced in. In contrast, COVID-19 cyclical or value sectors have lagged significantly. The MSCI Asia ex Japan index is up 6.8% in 2020 up to Aug 26. But among its nearly 900 member companies, 6 out of 10 remain negative YTD.
Favor large caps in EM Asia
- Unlike in the US, Asia’s small and mid cap (SMID) stocks actually outperformed the large caps by decent margin through the rally since the March low, while the YTD performance was similar to the overall index.
- This is partly due to different market structures in Asia, where COVID-19 defensives and cyclicals are much more balanced (around 50/50) in both SMID and large cap markets, whereas US tech giants hold dominant position in S&P 500.
- The outperformance of SMIDs was even more evident in the Chinese market, as CSI SMID 700 surged 27% YTD, while large caps lagged with 15% (as of Aug 26).
- The CSI SMID 700 had a higher proportion of growth stocks – IT and healthcare – weighing 34.1%, versus 20.6% in the large cap index. Citi analysts suspect that the stellar outperformance is unlikely to repeat as a broader recovery unfolds.
