March was a good month for Asian markets -- stocks recorded their best monthly gains in a decade and it looks like they'll extend this rally into April, outperforming their U.S. and European peers year-to-date. But does this rally have legs?
Daphne Roth, head equity research, Asia at ABN AMRO Private Banking is positive on emerging markets Asia, highlighting China and Hong Kong, as the latter is a by-product of China.
Roth told CNBC Asia Pacific’s “Protect Your Wealth”, that a number of signs prove China’s massive 4 trillion yuan ($585 billion) stimulus package will help cushion the country from slower economic growth everywhere else.
“The big fiscal stimulus and the speediness of some of this implementation have been confirmed by some of the sectors, particularly the cement sector. They have actually now been invited to bid for some of the projects, so visibility is there,” explained Roth.
Besides that, she has also noted that loan growth has been positive for two months – 1.6 trillion yuan in January, followed by 1 trillion yuan in February.
The best way to cash in on this market is to gain exposure to its cement sector and selected Chinese banks.
“One of the stock that we really like is China National Building Material. It is a cement company, not the largest, but the valuation is very attractive. The biggest one is Anhui Conch Cement, which is trading like close to 20x P/E, whereas China National Building Material is still trading at 12x, so it very attractive. The other way you can play the infrastructure theme is of course, through China Communication Construction,” revealed Roth.
China's major banks, which are seeing strong loan growth, as well as a low loan to deposit ratios, are also worth taking a look at, as evidenced by their strong 2008 results, Roth said, naming Bank of China and ICBC as two of her top picks.
Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."