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Olympic Covid Risk, BlackRock Japanese Equity in the Middle of China

BlackRock said this week it upgraded Japanese stocks, and even if “virus dynamics” improved, earnings growth would slow in the second half of this year.

BlackRock investment strategist Thomas Toh told CNBC on Wednesday.

The appearance of the Covid case has cast a shadow Even the official opening on Friday goes beyond the Tokyo Olympics. Athletes Village in Tokyo last weekend, And since then, more than 70 cases have been reported linked to the game.

Japan put Tokyo in a state of emergency until August 22 Audiences cannot participate in the game.

Why BlackRock prefers Japanese stocks

However, Taw pointed out a favorable situation for the Japanese market, despite the increased risk of Covid during the Olympics.

“There’s a clear risk in what happens at the Olympics,” Taw told CNBC’s “Squawk Box Asia.” But it was a “temporary headwind,” he said.

For one thing, the valuation is “a little more attractive in places like Japan,” and the country’s central bank remains accommodative, Mr Toh said. He is also positive about the profit growth of the company there.

Security guards are standing at the entrance to the Tokyo 2020 Olympic Athletes Village, which will be held in Tokyo on March 31, 2020.

Curl Court | Getty Images Sports | Getty Images

“We expect some funding to go to overweight upgrades, such as Japan and Europe, in the second half of this year.”

BlackRock said in a Monday report that it had upgraded Japanese stocks to neutral. This means that equities are expected to perform as well as their peers in other markets.

“We will upgrade Japanese equities to neutral. We see a global cyclical rebound to help boost earnings growth in the second half of the year. The country’s virus dynamics are also improving,” he said.

Immunization rates in Japan have risen significantly since the downturn earlier this year. According to Our World in Data, the average daily dose of vaccine given in June exceeded 1 million per day.

Read more about China from CNBC Pro

BlackRock is “overweight” in China

In China, BlackRock is currently “overweighting” domestic equities. In short, it outperforms its peers in other markets.

Despite ongoing antitrust crackdowns on Chinese tech companies, Taw told CNBC that investors have the opportunity to increase their exposure to Chinese stocks.

In the long run, strategically, we continue to advocate investors using the sale to increase their exposure to Chinese equities.

Thomas To

Investment Strategist, BlackRock

As a regulator, he said Chinese stocks are already selling significantly by 20% to 30%. Strengthen oversight of businesses, Antitrust practices, cybersecurity, data security crackdowns.

“In the long run, we continue to strategically advocate investors using the sale to increase their exposure to Chinese equities. We also overestimate Chinese bonds,” Toh said. ..

“I think this is an interesting opportunity to increase exposure if you are underweight, at least towards neutrality, or if you are overweight.”

Disclosure: CNBC’s parent, NBC Universal, owns NBC Sports and NBC Olympics. The NBC Olympics are the US broadcast rights holders for all Summer and Winter Olympics up to 2032.

Olympic Covid Risk, BlackRock Japanese Equity in the Middle of China

Source link Olympic Covid Risk, BlackRock Japanese Equity in the Middle of China

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