Economy-Facing Stocks Are The Best Bet Now, Says Avendus’ Andrew Holland
Investors should consider economy-facing sectors such as banking, industrials, energy and consumer goods despite the second wave of the pandemic threatening to slow down growth, according to Andrew Holland.
Consumer spending recovering to normalcy could also bring a boost to travel, leisure and the hotel industry, Holland, chief executive officer at Avendus Alternate Strategies, said in an interview with BloombergQuint’s Niraj Shah. The second wave of the pandemic, he said, may cause these sectors to face short-term restrictions and their earnings may suffer a temporary setback, before witnessing a huge uptick in the share price.
“You can get your timing wrong by a month or so but these economy-facing stocks should be part of your portfolio for the next one to two years,” Holland said.
His advice comes when the second wave of Covid-19 in India increases the risk of localised restrictions, slowing down recovery after the economy contracted for two straight quarters. India is not alone in concerns about the resurgence of the virus. Europe has seen infections rise and the U.S., too, fears a surge despite vaccination, posing risks to the global recovery that has propelled equity markets and sparked volatility worries.
Speaking about his views on volatility faced by Asian markets, the CEO said that
Asian economies and markets are bound to witness risk-off trades, causing them to be volatile for the next three to four months, Holland said. But Asia will grow in the next three to five years and investors must keep buying when volatility causes the market to fall, he said. “Asia is going to be the most preferred destination for foreign funds for the next two to three years."
Indian markets grew by 15-20% from the pre-pandemic levels despite the volatility which is a normal rise and he expects this momentum to continue in FY 2022.
Recent initial public offerings of gaming companies have been oversubscribed. Holland said there's a huge potential in such firms because entertainment will extend to sports beyond cricket.
Betting On Telecom
Holland called the telecom sector "a great area to be in" because of the long-term growth prospects and momentum will return when some expectations like price hikes by main players come to fruition.
Watch the full interview here: