Caution prevails in Asian stock markets amid US tariff fears, but losses may be limited: Analysts
A combined view is forming over US companies.
Mr Zane Well, research analyst at Phillip Securities Research, said the latest sell-off could possibly get the “end of the bull run” on Wall Street given factors such as pricey valuations and new slow economic data.
In contrast, the assumption that Trump may be vulnerable to declines in the stock market, known as the” Trump put”, is” so far nowhere to be seen”, he added.
Noting a sense of “scepticism” towards US companies in the adjacent phrase, Mr Murray said” there may be more interesting opportunities somewhere, especially in areas offering more attractive prices combined with an improving micro outlook”.
On the other hand, VP Bank continues to be overweight on US stocks even as it sees unpredictable trade policies stoking further volatility ahead.
The “back and forth over tariffs is already having an initial negative economic impact”, but this is not yet reflected in corporate profits, which are expected to grow 13 per cent this year, said the bank’s chief investment officer Felix Brill.
ASIA STOCKS TO “FARE BETTER”
Asian stock markets were not spared from a sell-off but seem to have steadied by Wednesday with a mixed picture of gains and losses.
As tariffs will inevitably be bad news for the region’s export-oriented economies, analysts said cautious sentiment will likely persist in Asian markets until a clearer picture emerges of the extent and severity of tariffs– both by the US and other countries in retaliation – that will be implemented.
” Trade uncertainty is the main driver of market concerns but once we get more clarity, consumers and businesses may adjust, and the impact could be less severe than feared”, said Mr Yeap.
Even then, analysts like Mr Aw reckoned that Asian stocks are still “likely to fare better than their US counterpart”.
Citing Chinese and Hong Kong stocks as examples, he noted that Chinese policymakers have pledged robust fiscal stimulus and a commitment to boost domestic consumption at the recent Two Sessions meeting.
The world’s second-biggest economy also set a growth target of 5 per cent for a third consecutive time, among others.
” These will aid to counter a potential drop off in tariff-sensitive exports from the ongoing trade war”, Mr Aw said.
In particular, Chinese tech stocks may present an “attractive risk-reward proposition and buy-on-weakness opportunity” on the back of China’s advancements in the field of artificial intelligence, upward earnings revisions and relatively inexpensive valuations, said Mr Yeap.
