3 ways the pros are trading
Wall Street is looking to round out the week on a high, after rallying Thursday, with the Dow Jones hitting a record above 50,000, while the S & P 500 is eyeing an eighth straight week of gains despite bond market volatility. Asian markets climbed, led by Japan’s Nikkei , while major bourses in Europe are also set for a positive end to the trading week. Here are three investment strategies we heard in CNBC’s Singapore and London studios on Friday to help navigate the noise. Undervalued Europe Michael Field, Chief Equity Strategist at Morningstar, currently sees an upside of around 5% within European stocks. He cites defense as an attractive sector, despite recent pressure, while sectors like consumer discretionary are “trading at maybe 20% to 25% discount to fair value estimate at the moment.” “Healthcare is trading at quite a sizeable discount as well, and even some of the European tech names are actually relatively attractive now at the moment,” he adds. Field also says recent dollar weakness “has inadvertently helped European companies”, adding that for U.S. investors looking for a diversity angle, there are still “plenty of good opportunities still left in Europe.” Trading the IPO summer David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory, believes European defense spending is going “to be a mega trend over the next 10 to 15 years,” as NATO leaders once again decry the lack of capacity in the industry. He believes this presents a buying opportunity “in the medium term.” Stubbs outlined his strategy ahead of what is expected to be a major summer of IPO activity in the U.S., headlined by SpaceX, saying that “a lot of our liquid equity is passive.” “We don’t particularly want to play this game of trying to game who’s going to be in the index, who’s not. We want to capture the broad growth that comes from a passive allocation. We want to take active share risk and active management risk in private markets and alternatives at the core of our portfolio.” Emerging market play Andrew Heiskell, Equity Strategist at Wellington Management, says he’s increasingly bullish on emerging market equities after “a very sharp turn in the fundamental performance” of the space. “The broadening out across emerging markets is lifting the growth prospects from a very depressed base of valuation,” he says. Heiskell adds that investor exposure to emerging markets has been underweight, but he is optimistic about future prospects. “We went through a period in the early 2000s where emerging markets were the leaders of global equity markets. A lot of capital came into emerging markets and then, over the course of the last 10 or 15 years, it’s been very disappointing, very depressed because of underperformance. A lot of capital went to the sidelines, now we think it’s just on the verge of coming back in.”
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