Stocks, bonds ‘more interesting’ in Asia than the U.S.

SINGAPORE — Investors should look at Asia instead of the U.S. when it comes to stocks and bonds, an investment strategist told CNBC this week.

“Given the election risk in U.S. and more expensive valuations, I think the Asian markets look more interesting – (there is) strong economic recovery, strong earnings and much cheaper valuations compared to the U.S. equity market,” said Suresh Tantia of Swiss investment bank Credit Suisse.

Economic data from China has been “quite encouraging,” and the coronavirus pandemic is largely under control in other North Asian markets such as South Korea, Taiwan and Hong Kong, he said.

“That has allowed the economic recovery to continue,” he told CNBC’s “Capital Connection” on Thursday.

Pedestrians walk past a stock market display board showing the Chinese state-owned commercial banking company Bank of China from the Hang Seng Index results in Hong Kong.

Budrul Chukrut | SOPA Images | LightRocket | Getty Images

Fixed income assets are also more attractive in Asia because spreads are still “much higher” than in the U.S., Tantia said.

“Asian (investment grade) bonds are offering yield of around 3%, compared to 2% yield in the U.S. We think there is slightly higher yield for similar rated companies in Asia,” he said. 

Market volatility

Tantia also said the last quarter of 2020 is likely to be “choppy” for markets, but that investors should buy on dips.

“If Joe Biden wins the election, you could see some knee-jerk, negative reaction in the market, because he has talked about raising corporate tax,” he said. “I can’t rule out a 5% kind of pullback in the equity market, but … we would buy that weakness, because at the end of the day, central banks are going to drive the markets.”

He said central banks will continue to support the markets, and that liquidity is “ample.”

“There are a lot of investors who are sitting on the sidelines just waiting for that pullback to buy equities, I think that would be a really good opportunity.”

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