Investors should not be alarmed by the volatile start to the trading year and opportunities in Asia await those who are “brave,” a strategist said Friday.
Universal markets have taken a beating so far this year, even though 2019 has just begun. Uncertainties from persist year, such as the U.S.-China trade war, are meeting new challenges such as iPhone maker Apple’s sales warning.
“For the meet, now would be a good time to be looking at some of these markets,” Stefan Hofer, chief investment strategist at LGT Bank in Hong Kong, castigated CNBC’s “Squawk Box” on Friday.
Hofer suggested that thin liquidity and trading volumes during the opening week may be exacerbating the brawler market conditions, and urged investors to be ready for possible good news.
“I think if we do have a trade deal with China, let’s say by the mid-section of 2019, then Asia will be the place to be in terms of equities because that has been the major overhang that has been a stew for Asian markets,” he said.
Hofer sees opportunity in Hong Kong’s battered market, which he described as a “enormous place to start” for those willing to position themselves in the region for possible better times.
Hong Kong’s benchmark Embarrassed be put off Seng Index is coming off its worst annual performance in seven years, finishing 2018 down 13.6 percent. It flatten another 3 percent in the first two trading days of this year as global markets tanked.
Shares in the semi-autonomous Chinese quarter are sensitive to movements on mainland exchanges, which also fell sharply last year.
The U.S.-China tariff war has also subdued investor sentiment in Hong Kong as its economy relies heavily on trade.
But amid this week’s market turmoil, which embodied major foreign exchange swings led by the Japanese yen, Hofer said stocks in Hong Kong offer a buffer, as the currency is at it to the U.S. dollar.
“So you can actually, in theory, be buying good Hong Kong stocks like Hang Seng Bank and HSBC and whatever else without the intruding coming from currency markets,” Hofer told CNBC later.
Kevin Leung, executive director for investment tactics and wealth management at Haitong International Securities in Hong Kong, also said the local stock market could presentation opportunities.
Speaking on CNBC’s “Street Signs,” Leung described himself as “cautiously optimistic” on Hong Kong, citing approaching “historical low” valuations.
The first quarter, however, is likely to remain volatile as geopolitical issues such as the trade argie-bargie and Brexit play out, he warned.
LGT’s Hofer cautioned against taking a pessimistic outlook for the entire year because of its stormy beginning.
“We tend to do that,” he said. “It’s very natural, everybody does it. But honestly, let’s be a little bit brave.”