Investors are drawing up a list of Asian stocks to buy on the dip

Key Points
  • A number of strategists named Southeast Asian and Japanese stocks as potential value buys amid the ongoing turmoil in global markets.
  • They also preferred Asian financials as countries including China and India press on with reforms.
Japan's equity market is still a value play

As market watchers continue searching for someone or something to blame for this week's sell-off in global markets, many seem to agree on one thing: There are stocks worth picking up on the dip.

Major money managers such as BlackRock, Amundi and Credit Suisse have said the ongoing turmoil in stock markets was not caused by a change in economic fundamentals. Instead, the narrative of a "synchronized global growth" still rings true underneath the sea of red, they said.

But this week's sudden pullback is a reminder of the importance of portfolio diversification, and a number of Asian names have emerged as "defensive" stocks that could withstand the current volatility.

"While for the time being we remain cautious, we will be ready to actively exploit opportunities which could be brought by this wave of volatility resurgence," Amundi Asset Management said in a note.

Some have even drawn up their shopping lists, here's what they contain:

Southeast Asia

Strategists at Morgan Stanley tapped Southeast Asian stocks — in particular Thailand and Singapore — for a defensive play, they wrote in a note this week.

The region's markets have appeared more resilient in the global blood bath this week compared to their North Asian peers such as Japan and Greater China.

Singapore and Thailand, for instance, dipped 2 to 3 percent between the close of last Friday and Thursday, while North Asian markets fell around 6 percent during the same period.

"It may seem somewhat late to be talking about a defensive stance. But we would continue to emphasise our preference for (Southeast Asia) ... over North Asia (technology stocks) and in particular Korea," according to the note.


For investors who would like greater exposure to North Asia, Japan appeared to be one favorite.

Amundi, for one, said in a note that Japan is a market where stocks are backed by solid earnings-per-share growth. That's a sentiment shared by Peter Boardman, managing director of NWQ Investment Management.

"The overall economy remains quite stable, it's growing, earnings are recovering," Boardman told CNBC on Friday, noting that when looking at earnings reports that have come out of Japan, around 80 percent of companies surpassed or met expectations.


In an environment where interest rates are rising, banks stand to benefit from a boost to lending profitability.

Asian financials have had a solid start to 2018, noted Morgan Stanley, with banking sectors in major economies such as China and India becoming stronger on domestic restructuring and improving asset quality.

As multiple countries in the region press on with reforms, their economies should be on more solid footing this year and that would also help their finance industry.

Within Asian financials, Morgan Stanley has an "overweight" view on South Korean and Indian banks. It also likes insurance firms in Hong Kong and China.