The coronavirus-triggered global stock-market selloff reportedly might present a good opportunity “to buy the dip,” Barron’s said.
Robert Buckland, an equity strategist at Citigroup, global equities will likely track the growth of earnings to post about a 4% gain in 2020, and that means any further drop in prices would make expected returns more attractive, Barron's said.
“Buckland argues that it might be time to hunt for some bargains. His team has put together a list of large-cap developed-markets stocks that generate at least 15% of their sales from China. Stocks in the list, including 25 U.S., 19 European, and 16 Japanese companies, performed strongly in 2019, rallying 36.6% for the year as the MSCI World benchmark gained 25.2%. They have recently underperformed, falling 4.6% since Jan. 17,” Barron’s said.
“These stocks could be vulnerable if worries around the coronavirus and Chinese economy escalate, and should remain under pressure until the outbreak is brought under control. That makes them a good buy. Many of the listed names are in the semiconductors, autos, and tech hardware sector, including Apple (ticker: AAPL), Intel (INTC), Nvidia (NVDA), TE Connectivity (TEL), and Western Digital (WDC),” Barron’s said.
Meanwhile, China's central bank injected 1.2 trillion yuan ($171 billion) into money markets as it attempts to limit the damage from travel curbs and business shut-downs on the economy.
However, the intervention could not stop a near 8% plunge in Chinese stocks as investors played catch-up after an extended holiday.
Fears surrounding the economic impact of the epidemic, which has been declared as a global emergency, shaved off more than 600 points from the Dow Jones Industrials on Friday, with the three main indexes suffering their worst week in at least four months.
"People are just looking at this as an opportunity to step in and do a little bit of buying," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
"The coronavirus concerns are still at the forefront of investors' minds," he told Reuters.
The uncertainty following the virus outbreak that pulled the benchmark S&P 500 into the red for the year on Friday has overshadowed fourth-quarter earnings season in the United States.
So Citi's advice of jumping into the market now in pursuit of bargains falls in line with Warren Buffett's saying about the stock market and investing in general: “Be fearful when others are greedy and greedy when others are fearful.”
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