HSBC Global Asset Management remains upbeat about Asian stock markets, particularly China, where the government is pursuing long-term reforms.
Bill Maldonado, global chief investment officer of equities, said the price-to-book ratio of Asian equities is 1.34 times at the moment, not far from a low of 1.23 times during the global financial crisis in February 2009, the Hong Kong Economic Journal reported on Wednesday.
The recent slump in the stock markets has provided investors with a rare opportunity to boost their portfolios, Maldonado said, noting the discount of cyclical stocks to defensive equities has widened to 65 percent, compared with the deepest level of 74 percent in December 2008.
In recent years the annualized return on equity of Asian shares is close to 20 percent with a dividend yield of 6 to 7 percent.
Meanwhile, Maldonado said he expected China’s non-performing loan ratio to rise this year amid overcapacity in some industries, but at a manageable pace.
Asia-wide, the NPL ratio will remain stable at 2.5 percent this year, well below the 5.5 percent in Latin America and 2.9 percent in Europe, the Middle East and Africa, he said.
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