More market volatility is expected in 2H21 as the world adjusts to a new normal. Concerns over the uneven vaccination rates across countries, continuing US-China tensions, rising cost pressures, and the Fed’s taper timeline are contributing to the market choppiness. We believe the ‘easy money’ from a snap-back recovery has been made.
Among our regional equity coverage, we are positive on countries that are external oriented given the progressive global recovery and have a high local vaccination rate to support a resilient reopening. Singapore meets both these conditions best, followed by Hong Kong.
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Firms with resilient earning growth
Demand for 5G hardware, AI, EVs, PC/gaming consoles, as well as the burgeoning e-commerce trend, will help semiconductor firms, internet software and logistic companies to sustain growth amid cost pressures.
We like AEM, UMS, Tencent, and Mapletree Logistics Trust.
Reopening beneficiaries
The worst is likely over for domestic reopening stocks in Singapore and Hong Kong thanks to their high vaccination rate.
We like Frasers Centrepoint Trust, Mapletree North Asia Commercial Trust, Chow Sang Sang, and Swire Properties.
Environment-focused names
Expect renewed focus on the environment as the world emerges from the pandemic. Stocks whose primary business activities protect the environment will likely see a boost.
We like China Everbright Greentech, Xinjiang Goldwind Science & Technology, and Guangzhou Automobile Group.
Trade diversion beneficiaries
Return of US-China trade conflict could see order streams shift to Asia.
We like Venture Corporation and Pacific Textiles.
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