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Bet on Big US Firms with Exposure to Asia: Analyst

The wild swings in the stock market may have many investors running for the exits. But for those who can stomach volatility, Richard Martin, Managing Director at financial consultancy IMA Asia, recommends buying stocks selectively.

Auto worker works on assembly line at GM Lansing Grand River plant.
AP
Auto worker works on assembly line at GM Lansing Grand River plant.

“During this period of volatility, everyone looks for safe haven. Can I tell them exactly what's going to happen in the next three months? No. But I can tell them, after the volatility, go back to the standard place,” Martin told CNBC on Tuesday.

This “standard place” refers to big American companies that have big exposure in Asia, says Martin, like Procter and Gamble or General Motors .

"Look at the corporates which have got big positions in emerging markets, particularly the Asian markets, which should do well," he said. "This is...global re-alignment, the rise of emerging markets and the power of U.S. multi-nationals in it."

While the current market volatility could roil these stocks in the short term, Martin says investors need to steel their nerves, as the upside can be "phenomenal."

"You never get the timing right, okay. It's probably better to buy while it's still going down than to try and guess when it's going to go up," he noted.

As for Chinese firms which operate in their own markets, Martin advises against owning them despite their cheap valuations, simply because it’s too risky.

"It's hard to figure out who owns them, how they operate, whether they have balance sheet problems," he said.

“Right now, we do have some big risks brewing in China, and we don't know how they're going to play out in terms of their own bank system and their own corporates,” he said.