ASIAN EQUITIES are set to benefit from a confluence of factors as the global economy recovers, according to Jefferies Financial Group, Inc.

Cyclical shares, undervalued companies and technology names are poised to rally on the “old-school recovery” of a weak dollar, softer oil prices, a pick-up in global trade and the digitalization theme amid unprecedented monetary and fiscal easing, global equity strategist Sean Darby said at the Jefferies Asia Forum. “This is going to be one of the best periods for Asian equities,” he said.

The MSCI Asia Pacific Index has erased its year-to-date losses to climb more than 1% in 2020. Analysts expect it to rise another 13% over the next year, pushing it past an all-time high in January 2018, according to data compiled by Bloomberg. The gauge is trading at about 17 times earnings estimates for the next 12 months versus about 22 times for the S&P 500 Index.

In China, autos as well as domestically oriented airlines listed in Hong Kong are set to outperform over the next six to eight months, according to Jefferies. Japan’s trading houses and the materials sector, particularly steel firms, could also rise amid global reflation, as could companies in Taiwan and Korea as they offer high credit ratings and decent dividend cover, Mr. Darby said.

The Hong Kong-based strategist also favors Asian technology names versus their U.S. peers on valuations even after a rout in technology stocks plunged the Nasdaq 100 index by 8.5% this month.

“If the dollar continues to weaken, then the period for value shares to outperform growth is looming on the horizon,” Mr. Darby said. — Bloomberg

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