Wells Fargo Likes Asia-Pacific Stocks, Emerging-Market USD Notes
(Bloomberg) -- Wells Fargo Investment Institute likes stocks in Asia-Pacific region and USD debt in emerging markets as investors can probably benefit from improving economic and earnings fundamentals in a near-term investment perspective, Peter Donisanu, St. Louis-based global research analyst, writes in note dated Thursday.
- High income levels, together with aging demographic, are likely to produce opportunities in the region’s health care sector as Japan, Australia and New Zealand have the largest 60-and-over population in the Asia-Pacific region; in 5 years, more than 7% of Hong Kong, South Korea and Taiwan’s population will cross this threshold
- South and Southeast Asia’s youthful population and rapidly rising incomes are likely to benefit real estate and consumer-oriented companies as disposable incomes rise and household formations grow in coming years
- Robust improvements in Japanese labor market conditions, consumer spending and business investment continue to underpin co.’s favorable rating for Pacific stocks while stabilizing Chinese economy and rebound in international trade support favorable rating for EM Asia stocks
- Co. sees developing currencies to rise vs USD over next 12 months as economic growth and trade fundamentals support the strength
- Still, co. recommends investors seek out USD EM bonds over local-currency notes due to potential for heightened levels of volatility in developing currencies
- Co. is underweight international developed-market bonds relative to their benchmarks as widening interest-rate differentials induced by Fed will probably favor U.S. debt market; it prefers the U.S. bond market over developed Asian debt market
To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net
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HALISTER1Source: BFW (Bloomberg First Word)
People Peter Donisanu (Wells Fargo & Co)
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