Wealth managers react to the sell-offs in Asia and Wall Street, that saw the S&P 500 and Dow Jones Industrial Average clocking their biggest one-day percentage losses in two years.
Wealth managers responded to this week’s sell-offs in Asia and Wall Street with the adage: stay invested.
In fact, Youssry Henien, chairman of the Windsor Family Office, did some buying in Los Angeles on Monday.
That was the day the S&P 500 and Dow Jones Industrial Average clocked their biggest one-day percentage losses in two years, on fears of a coronavirus pandemic.
‘The virus is like a cold coming and going. It will not go on forever.
‘I don’t believe that a recession is coming. On the contrary, I think the stock market is going to make new highs this year,’ Henien told Citywire Asia.
Henien set up his single family office in Singapore in December. He travels regularly to London, Switzerland and the US, where he likes stocks like Apple, Facebook and JP Morgan.
Most US indexes racked up more losses on Tuesday and Wednesday. The decline extended to Asia, with the Hang Seng Index losing 0.7% Shanghai Composite dropping 0.8% and the Hang Seng Index losing 0.7% at Wednesday’s close.
UBS has asked clients to seek out dividend and ‘stay-at-home’ stocks in the e-commerce, gaming and food delivery sectors.
They should avoid pickings that rely on travel, including airlines and hotels, to improve the risk-reward profile of their portfolios.
The Swiss giant, meanwhile, will keep its overweight in emerging market equities versus the Eurozone.
Its chief investment office views recent dips in the MSCI Asia ex-Japan index as an ‘attractive longer-term entry point’.
This is assuming the outbreak is successfully contained in China in the coming weeks, that would confine the economic and market impact of COVID-19 to the year’s first quarter.
Should that take place, UBS expects earnings growth of near 12% in the Asia ex-Japan region this year.
Valuations in the region are at 1.6 times book value, close to a 35% discount to global peers, the office noted.
Furthermore, the forward price-to-earnings discount on EM equities, versus those in developed markets recently increased to 28%, above five- and 10-year averages.
On the other hand, the emergence of new cases in Italy could cause a plunge in consumer and business confidence in Europe.
Liechtenstein-headquartered VP Bank believes other central banks would follow stimulus measures taken by China, if necessary.
The bank has advised investors to stay broadly diversified within and between asset classes, as the stock market’s losses have been accompanied by gains in gold and bonds.
‘Despite the heavy levies, we do not consider the current market reaction to be panic. Those stock exchanges that hardly suffered yet, show the strongest reaction,’ it said.
Source: https://citywire.com/asia/news/rewards-to-be-found-in-the-coronavirus-sell-offs/a1327309