Market Tips: Defensive Plays are Passé, Expensive
Global stocks were mixed Wednesday, a day after US President Barack Obama signed off on the $787 stimulus bill. Experts on CNBC said that although defensives were hot property last year, they are too pricey this year.
No More Defense?
Defensive plays were the way to go in 2008 but they are currently too expensive, says Garry Evans, head of Pan-Asian strategy at HSBC. As he believes markets will be in a trading range this year, he reveals his top Asian picks.
Look for High-Quality Stocks
"If there's a bull market in the making, it's in high-quality stocks. High-quality stocks have been phenomenally cheap over the last 5 years, and now they're starting to get re-rated," Khuram Chaudhry from Merrill Lynch said. "You tend to buy high-quality stocks when there's an abundance of bad news, either on the economy or on profits."
High-quality stocks are companies with a stable earnings growth and dividends; "sensible" balance sheets; with low leveraged companies with high returns on equity, assets and capital, according to Chaudhry.
Great Opportunities for Long-Term Investors
"This is the best buying opportunity for long-term investors in almost 50 years. You have equity markets trading at extreme lows on valuations of what are more normal earnings," Jason Pride from Haverford Trust said, adding this will happen when the economy and markets stabilize.
Still Cautious on Investing in Banks
You can trade European banks like options: buy on weak days and sell on strong days, but nothing for long-term positions as the risk for the future of the sector simply cannot be valued, according to Stefan Muller, hedge fund manager at Proprietary Partners Fund.
US Stimulus Plan Positive for Markets
The U.S. stimulus package is a positive step, but it will take a while before this feeds through to the markets, says Meg Browne, senior currency strategist at Brown Brothers Harriman. She tells CNBC that she does not expect to see its impact until the second-quarter.
Profit from Risk Aversion Trades
The risk aversion trades that we have seen recently are probably going to continue to make money, says Dariusz Kowalczyk, chief investment strategist at SJS Markets.
Bad Debts on the Rise
Bad debts will continue to rise in the second-half of the year, says Colin Whitehead, analyst at Fat Prophets.
Negative Outlook for Hong Kong Banks
There is a renewed concern on emerging markets' country weightings. And that would be a negative for HSBC and Standard Chartered Bank, says Alex Wong, director of asset management at Ample Capital. He gives his outlook for HK banks.
Investment Opportunities in Africa
Infrastructure, including energy and water, is an area of opportunity for investors interested in Africa. Katharine Pulvermacher, CEO of African Rainbow, goes into detail as to why Africa presents these opportunities.
Stocks at Risk of New Lows
Global stocks are dancing around at precarious levels and risk new lows, Lorraine Tan from Standard & Poor's Equity Research told CNBC. Marc-Aly Ben Abdallah from Credit Agricole joined the discussion.