4 Winning Asian Stocks To Buy As Geopolitical Tensions Ebb
Zacks Investment Research | May 02, 2018 09:00PM ET
Asian markets have been provided the right stimulus for growth in the recent past. With the conclusion of the historic inter-Korean summit, geopolitical tensions have ebbed causing stocks markets in the region to rally. Further, the Asian Development Bank has stated that the region would witness upward of 6% growth this year.
Finally, China’s president Xi Jinping recently announced plans to patronize global trade and promised to announce policies to boost foreign investments in that country. Under such favorable conditions, investing in stocks from Asia seems prudent.
Historic Inter-Korean Summit
On Apr 27, South Korean President Moon Jae-in and North Korea’s Kim Jong-un created history at the third inter-Korean summit. This marks the first time since the armistice of 1953 that a North Korean leader has stepped on South Korea’s soil. The summit concluded with each leader promising to denuclearize the Korean peninsula and ending the Korean war by this
However, the joint-declaration was a signed statement between the two countries and is “not legally binding,” with no details as to how North Korea would go about denuclearizing itself. However, North Korean leader Kim Jong-un assured that he plans to invite international experts to his country to ensure that the process is transparent to the world at large.
Further, on Apr 28, President Trump stated that there could be a meeting between the United States and North Korea in the next three to four weeks, which would be the first of its kind in history. Asian stock markets have rallied on such developments, with the continent’s top equity benchmarks ending higher on Apr 27.
ADB’s Positive Economic Outlook for Asia
In a report published on Asian Development Outlook (ADO) 2018, the Asian Development Bank (ADB) stated that it remains positive in its outlook for the region’s economy. The body predicted that developing Asia would expand approximately 6% in 2018 and 5.9% in 2019. Even if Asia’s newly industrialized high-income economies are excluded, overall growth in Asia is expected to be around 6.5% in 2018 and 6.4% in 2019.
In the recent past, oil prices have edged higher. This apart, consumer demand has remained robust. Such factors are expected to push inflation higher in Asia this. The report projects consumer prices to rise 2.9% in both 2018 and 2019.
China Stays Strong
The world’s second-largest economy China has been growing at a steady pace for the past one year. Further, the Asian Development Bank stated in a report on Apr 11 that China would keep growing more than 6% in 2018 as well as 2019. The recent shift of focus from manufacturing to services has been pivotal in China’s economic growth story.
In its recent report, the ADB stated that it expects China’s economy to expand at a pace of 6.6% in 2018. Based in Manila, Philippines, the bank also expects the Asian giant to exhibit 6.4% growth in 2019.
In a speech at the Boao Forum in Hainan province in China on Apr 11, Xi Jinping said that he is optimistic about the economy. He also stated that China is opening up newer avenues for both domestic and foreign investments, indicating that he supports globalization.
Further, the private Caixin/Markit PMI, which surveys small and mid-size businesses in China increased 51.1% in April, against an expectation of 50.9% for the same period. The metric was at 51% in March. Any reading above 50 depicts economic expansion.
4 Top Stocks
Denuclearization talks in the Korean peninsula, Trump’s hints toward a possible U.S.-North Korea summit and his postponement of the import tariffs for the next 30 days have significantly reduced geopolitical tensions in Asia.
Further, as the ADB remains positive about growth in the Asian economy in 2018, there are multiple reasons for investors to consider stocks from the region. In this context, we have selected four stocks that are expected to gain from these factors. These five stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see Zacks Investment Research
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