Six types of assets can be the difference between a winning and losing portfolio. At least, for the team of strategists at UBS Global Wealth Management lead by Mark haefele, which identifies two megatrends that are about to make an appearance: a fall in inflation from its current high levels and a rise in Asian stock markets thanks to the vaccination plan against Covid-19.
UBS maintains its optimistic view of world stock markets, but recognizes that investors can and must find new opportunities within this new scenario of which they have given a couple of strokes.
1. Get away from the American and Asian mega-caps, such as Apple, Amazon, Alphabet (Google's parent company), Facebook, Alibaba and Tencent, which have "few catalysts in the short term." Instead, Haefele and his team propose to invest in European small and mid-caps exposed to trends such as 5G, fintech, greentech and healthtech, as well as businesses based on digital subscription.
2. Buy energy titles by the handful. The sector has risen close to 50% so far this year, but it is still only at pre-pandemic levels, while without going any further the S&P 500 is trading 25% above its levels in February 2020, just before the crisis. Rising oil prices, which UBS anticipates, should sustain the energy rally.
3. Invest in the financial sector. Some stocks, such as banks in the S&P 500, the world's benchmark index, have risen 9% since early March and the prospect of a rate hike should further pave their way to the stock market, according to UBS.
4. Go for the American small and mid-caps. Haefele's team also recommends investing in these types of listed companies, with a market capitalization of less than $ 10 billion but above $ 300 million. "If we are guided by their PER, the valuation of these companies is close to their minimum of 20 years ago with respect to large-caps and despite the fact that everyone expects their profits to grow even more than those of these, at least, until 2022 ".
5. Coup in Little China. UBS advises to buy on the dips, in this case, registered by the Chinese stock markets. MSCI China has just entered bearish territory last May due to the higher profitability of the US Treasury and the antitrust measures exercised against the country's technology companies.
6. Japan 2021. The country of the rising sun will not only host the Olympics this year, but it is also perfectly positioned for the recovery of its equities. The Swiss entity expects a 40% growth in EPS from the MSCI Japan member companies.
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