International investor Rupal Bhansali unveils her best picks in different countries

Published Wed, Dec 2 20204:33 PM EST

(This story is for CNBC Pro subscribers only.) Veteran investor Rupal Bhansali believes when it comes to international markets, it's all about picking the right stocks. The chief investment officer and head of international strategy at Ariel Investments said risks can be high when investors tap into emerging markets and developed ones overseas due to specific geopolitical uncertainties. "The opportunity in China, or in Asia, or in any stock market in the world now is more from a stock-picking perspective and curating on an individual basis as opposed to this broad brushstroke that you can have with an ETF or a passive exposure benchmark," Bhansali said in the latest PRO Talks series with Seema Mody on Wednesday. "I think that trade is behind us." Bhansali, who has more than 25 years of industry experience including for Soros Fund Management, discussed how she screens out high-risk companies and revealed her best picks in different countries. The money manager said she's most bearish on the U.S. stock market as its dominant position is likely not sustainable. "In terms of global markets, I'm most negative on the U.S. market which is about 57% of the global markets' benchmark. Off the charts frankly," Bhansali said. "No country has ever surpassed that kind of weight in history, which tells you what a crowded trade it has become." In emerging markets, sometimes the worst companies are listed on stock exchanges because of the need for capital and they don't have the same corporate governance as one might expect, Bhansali said. Meanwhile, quality stocks can be very expensive. For example, Indian bank HDFC Bank is a good company but very overvalued, she said. Instead, investors can buy Banco Santander (BSAN) in Chile and pay half of the multiple, or Credit Corp (BAP) in Peru. Both stocks have ADRs in U.S. markets at very low cost, Bhansali said. One of her favorite ideas has been China Mobile, which she called a "dirt cheap" stock. However, the company was recently outlawed by the Trump administration in a bid to limit American investors' access to Chinese telecoms. "If it were to be removed, that's one I would recommend first and foremost," she said. Bhansali also recommends Swisscom in Switzerland, which has a 4.5% dividend yield and Deutsche Telekom in Germany with a 6.5%. In China, Bhansali said Baidu is a "very attractive" stock to own and it's one of her largest holdings. She noted the two new investments Baidu made — Buzzfeed and a streaming media service — is creating losses and masking the true value of its search engine businesses.

(This story is for CNBC Pro subscribers only.)

Veteran investor Rupal Bhansali believes when it comes to international markets, it's all about picking the right stocks.

The chief investment officer and head of international strategy at Ariel Investments said risks can be high when investors tap into emerging markets and developed ones overseas due to specific geopolitical uncertainties.

"The opportunity in China, or in Asia, or in any stock market in the world now is more from a stock-picking perspective and curating on an individual basis as opposed to this broad brushstroke that you can have with an ETF or a passive exposure benchmark," Bhansali said in the latest PRO Talks series with Seema Mody on Wednesday. "I think that trade is behind us."

Bhansali, who has more than 25 years of industry experience including for Soros Fund Management, discussed how she screens out high-risk companies and revealed her best picks in different countries.