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Bank Of America Suggests Contrarian Asia Plays

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Bank Of America Suggests Contrarian Asia Plays
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  • Bank of America’s recent client data show that funds are readjusting positioning in Asia.
  • Funds are currently underweight Asian and Australian financials and overweight Indian financials.
  • Bank of America believes that the China-driven selloff has created targeted buying opportunities.
  • As fears over China continue to grow, the most recent data from Bank of America show that large funds reduced exposure to Asia even further last month. As share prices continue to plummet, analyst Nigel Tupper sees value opportunities opening up in Asia for contrarian traders.

    The Trends

    While looking at the most recent data from large funds, Tupper identified several investing trends. First, funds have been eager to reduce exposure to China and industrials.

    In the Asian tech space, Tupper noted that funds reduced their overweight positions in Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE: TSM) and reduced their underweight position in SAMSUNG ELECT LTD(F) (OTC: SSNLF).

    Related Link: The Contrarian Case To Sell Cablevision Shares

    Financials

    Bank of America’s data show that funds are underweight Australian financials, such as Westpac Banking Corp (ADR) (NYSE: WBK) and Chinese financials. On the other hand, the funds are overweight Indian financials such as HDFC Bank Limited (ADR) (NYSE: HDB) and ICICI Bank Ltd (ADR) (NYSE: IBN).

    Potential Trades

    According to Tupper, the selloff in Chinese and Australian names has created potential buying opportunities. “Our BoAML fundamental analysts have some recommendations that differ meaningfully from investor positioning,” he explained.

    Bank of America believes that the selloff in Australian and Chinese financials is overdone and sees Westpac as a Buy at current levels.

    In addition, while investors have been selling India tech companies, Tupper sees a buying opportunity in Infosys Ltd ADR (NYSE: INFY).

    Disclosure: The author holds no position in the stocks mentioned.

    Latest Ratings for TSM

    DateFirmActionFromTo
    Nov 2018Morgan StanleyUpgradesUnderweightEqual-Weight
    Jul 2018SusquehannaUpgradesNeutralPositive
    Jan 2018Goldman SachsUpgradesNeutralBuy

    View More Analyst Ratings for TSM
    View the Latest Analyst Ratings

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