Credit Suisse's Private Bank Smiles On Asian Tech Stocks, Japan Exporters

Tom Burroughes

15 August 2013

Although the Asia-Pacific region has experienced softer growth rates than in recent years, the private bank of Credit Suisse says it is positioning to hold those Asia firms likely to benefit from an upswing in developed markets.

The Zurich-listed bank is recommending a list of Asian technology stocks and Japanese exporters, such as Bridgestone; Honda; Hutchison Whampoa; Samsung Electronics; Sony; Toshiba, Toyota and TSMC.

The improved macro-economic momentum of nations such as the US supports a rebound in Asian exports for July, the Swiss private bank said.

“Equity markets in Japan, Taiwan and South Korea are best positioned to benefit from a global recovery given their geared exposure to the technology sector,” said.

The acceleration in global growth, and a more stable picture in China – after the slowdown in that country amid deleveraging – should boost Asian earnings momentum into the second half of this year, after forecasts were cut in June and July, the bank continued in a note.

The bank pointed out that the the MSCI Asia Pacific and MSCI Asia ex-Japan indices of equities rebounded by 7.0 per cent and 6.6 per cent from their late-June lows, respectively, with momentum indicators recovering to neutral territory from the oversold levels in late-June.

Trading at a 12-month forward price-earnings ratio of 10.6 and 12.3, respectively, the MSCI Asia ex-Japan and MSCI Asia Pacific indices are priced at a 12 per cent and 13 per cent discount to their 10-year average. In other words, they are attractively priced given a forecast earnings growth rate of 13.4 per cent for non-Japan Asia and 25.3 per cent for Asia Pacific.

“We expect the mild global growth acceleration and China's growth stabilization in H2 2013 will improve earnings momentum in Asia in coming months, as indicated by the stronger-than-expected China macro indicators in July,” the bank added.