Reclaiming the top spot after two years in second place is Sakthi Siva’s two-person team at Credit Suisse. “Her calls on market direction are very timely,” declares one backer. Case in point: “We continue to suggest buying on dips,” the Singapore-based crew leader says. “While it is traditional to sell in May, we highlight that price-to-book of Asia ex-Japan is still a rather low 1.63 times.” The strategists are bullish on quality cyclicals — “these are stocks with a rising [return-on-equity] trend,” she explains; examples include Taiwan Semiconductor Manufacturing Co. and South Korea’s Samsung Electronics Co. “We are also selectively bullish on commodity cyclicals when valuations are close to 2008 lows,” adds Siva. SK Innovation Co., a South Korea–based manufacturer of chemicals and petroleum, and China Shenhua Energy Co., a state-owned coal mining company, are two recommended names. Looking ahead, the analysts are optimistic about the region’s prospects. “We are finally starting to see upgrades to 2013 consensus earnings-per-share estimates. In March the upgrade was 0.1 percent and in April, 1.1 percent,” she notes. “We believe a key reason why Asia’s emerging markets have underperformed global equities since September 2010 is persistent EPS downgrades. With this starting to change, we believe Asia may start to outperform.” — Thomas W. Johnson |
Economics & Strategy – Equity Strategy: First
