Asia Pacific equities have been a hot favourite for private banks this year.
Wealth managers like DBS Private Bank and Deutsche Bank Wealth Management are in fact seeing the recent market sell-off as a buying opportunity in emerging Asia.
Joining its peers, VP Bank, too, has gained confidence in the sector and revealed its top Apac equity picks, based on five quantitative factors: valuation, profitability, momentum, growth and capital allocation.
Unsurprisingly, half of the stocks come from China and Hong Kong.
‘Risks in China are partly due to monetary tightening by the central authorities,’ said Bernd Hartmann, head of investment research.
‘We regard Chinese consumers as an important long-term pillar of the domestic economy.’
The Liechtenstein-headquartered bank favours Chinese smartphone components manufacturer AAC Technologies, and Ping An Insurance, the second largest Chinese insurer.
It has also given ‘strong buy’ ratings to three Hong Kong stocks: Beijing Enterprises Holdings, China State Construction International (CSCI) and pork company WH Group.
Hartmann said China has been encouraging public-private partnerships, with projects running into trillions of yuan, benefitting construction companies like CSCI, which is the largest construction contractor in Hong Kong.
South Korean firms LG Chem, a chemical manufacturer, LG Uplus, an affiliate of the LG Group, and Samsung Electronics also made it to the list.
Mitsubishi UFJ Financial Group and TDK Corp, both Japanese names, are also among the bank’s equity picks for a one year holding period based on good valuations and strong momentum.
Commenting on Mitsubishi, which owns more than 20% of Morgan Stanley, Hartmann said: ‘This could be a lucrative venture, considering Morgan Stanley's renewed focus on asset management and the potential for a secular shift of investment preferences in Japan.’