Invesco’s Kristina Hooper sees important alternatives in areas shunned by a majority of traders.
Despite the brand new omicron wave, she lists emerging markets — together with China — as 2022’s top locations to place cash to work.
“We always knew it would take longer for emerging markets to get populations vaccinated. But clearly there is a ramp up occurring, and it’s going to continue well into 2022,” the agency’s chief international market strategist instructed CNBC’s “Trading Nation” on Monday. “So, that means 2022 should be for emerging markets what 2021 was for developed markets in terms of participating in a more robust reopening of their economies.”
Up to now this 12 months, the iShares MSCI Emerging Markets ETF, which tracks massive and mid-sized publicly traded corporations in growing areas, is dramatically underperforming the S&P 500. The ETF is off 6% up to now this 12 months whereas the S&P 500 is up 24%.
Hooper acknowledges investing overseas in locations such as China takes braveness.
“There’s this conventional wisdom that China is uninvestable. It is not uninvestable,” stated Hooper, who’s notably bullish on the nation’s tech business.
China’s lawmakers are within the midst of a serious regulation crackdown as a part of its “common prosperity” push. Beijing regulators are in search of extra management over industries together with tech, gaming, e-commerce and training.
‘It is an actual contrarian play’
“Regulations have been targeted on specific areas that sync with long-term policy objectives by the Chinese government,” she stated. “We’re closer to the end of any significant series of regulations than we are towards the beginning. This is very much a buying opportunity. I think it’s a real contrarian play.”
In additional of a mainstream take, Hooper is bullish on U.S. shares, too. Up to now, she’s additionally not overly fearful in regards to the new Covid-19 omicron strain here either.
“This does seem to be very contagious, but very mild. And so, it suggests that we are unlikely to see lockdowns,” she said. “The metric to follow right now in the absence of lockdown… is mobility. And, mobility has hardly been affected in terms of individuals getting out, participating in shopping [and] restaurants.”
Hooper believes Federal Reserve policies won’t derail the risk-taking environment either.
“The U.S. is likely to see a deceleration in its economy as the Fed starts to tighten, and of course, as we see fiscal stimulus removed,” noted Hooper. “We’ll still likely remain above trend in terms of growth.”
And, that’s where Hooper’s outlook takes another contrarian turn. One of her major calls includes U.S. tech stocks outperforming cyclicals. According to Hooper, there’s a widely held assumption on Wall Street that tech is a safer asset class.
“We could certainly see cyclicals outperform in the shorter term given what I expect to be a strong December,” Hooper said. “But I do believe for the vast majority of 2022, we’re going to see secular growth [and] defensives, especially technology, perform better.”
The tech-heavy Nasdaq is up 20% so far this year, and 125% since the pandemic low.
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