A Top Asia Fund Manager Says This Stock Selloff Is a Time to Buy
(Bloomberg) -- As the stock selloff extended in Asia on Wednesday, one top money manager was anything but concerned.
Alan Richardson, who oversees about $446 million for Samsung Asset Management Ltd. in Hong Kong, says the four-day decline in the region’s equity markets is nothing more than investors locking in profits before they close their books for the year. The manager of the Samsung Asean Equity Fund, which has beaten 97 percent of peers over the past five years, says the broader trend of global economic growth is intact, and he’s using this opportunity to buy more shares.
Japanese stocks tumbled in Wednesday afternoon trading in Tokyo, with the benchmark Topix index heading for its biggest drop since March. The nation’s equities started sliding late last week and have been retreating ever since, with the fallout spreading to other markets. The sudden rout comes after big gains that sent a measure of Asian shares within touching distance of a record close. The region’s benchmark gauge has lost more than 2 percent in four straight days of declines.
“This is merely profit-taking before the year-end,” Richardson said. “This is an opportunity to accumulate good stocks for stronger growth in 2018,” he said. “We are still in the early stage of a fundamental recovery.”
Other strategists and fund managers contacted Wednesday had similar views:
Jason Low, (Senior investment strategist at DBS Group Wealth Management in Singapore):
- Stock investors are probably taking some profits off the table after doing “extremely well” and market participants likely winding down towards year end
- “Asian equities are likely to continue outperforming developed market peers in 2018 after a long period of under performance from 2010-2016”
- Region likely to be supported by cheap valuations relative to developed markets, better earnings growth prospects and a gradual U.S. rate hike outlook on better global growth environment
Noriyuki Sato (Chief investment officer for Asset Management One SP in Singapore):
- Asian stock markets are correcting as they have been “quite overbought”
- Correction could “last a bit in terms of time period” but Sato doesn’t expect declines to be too steep
- “We’re also at the time of year when investors want to close up their positions”, many hedge funds end their fiscal year in November so market could be short on liquidity
- Investors will take cues from developments with U.S. tax reforms and moves in chip makers around the globe, a sector that has played a huge roll in global equity rally
Jonathan Ravelas (Chief market strategist at BDO Unibank Inc. in Manila):
- “This is just a pause that is healthy for the market considering the sharp rally it’s gone through in the past two weeks”
- Market is facing a resistance at its 10-year high and a reason for that is valuation isn’t actually cheap based on 10-year and 5-year averages
- Investors are likely trying to protect some of their gains as year-end approaches
- The slow progress of U.S. tax reforms and the high likelihood of a U.S. rate increase in December are adding to market weakness
Narongsak Plodmechai (Chief investment officer at SCB Asset Management Co. in Bangkok):
- Correction is “understandable” after a sharp rally and some investors may want to “lock up their profits before going for holiday in next few weeks”
- Markets such as India and Hong Kong also have “very stretched valuations”
- Any 5-10 percent drop should be a good opportunity for bargain hunting and valuations for Asian equities are still attractive compared with other regions
Hao Hong (Chief strategist at Bocom International Holdings Co. in Hong Kong):
- Current declines in Asia should be just a correction, “as we are only halfway through a cycle of earnings improvement”
- Limited declines have been eye-catching after long uninterrupted rally
- Investors are becoming more concerned about U.S. tax reform, rate hikes and China’s slowdown
Kerry Craig (Global market strategist at JPMorgan Chase & Co. in Melbourne):
- Market is “taking a breather” and it is “more of a sentiment thing than rather a change in anything fundamental’’
- A short-term correction in the market would be “very welcomed” to get rid of “fears about complacency”
- Sees its as “sort of a release of the pressure valve’’
- People could be taking profits on stronger Euro, some uncertainty in the Italian election, worries about the tax outcome in the U.S.
©2017 Bloomberg L.P.