Kristina Hooper: Why It May Be A Good Time To Buy China Tech Stocks

By Amit Chowdhry ● November 23, 2019
  • Invesco US chief global market strategist Kristina Hooper explained why now might be a good time to buy China tech stocks

While some analysts recommend staying away from Chinese technology stocks due to volatility in the trade war, Invesco US chief global market strategist Kristina Hooper believes that this is a buying opportunity. Why? China has more to gain from trade negotiations and could emerge as a winner.

“This could be a scenario where China is actually able to stimulate its economy enough to ride out this war,” said Hooper in an interview on CNBC’s Trading Nation. “We’re looking at the potential for more fiscal stimulus, more monetary policy stimulus and so that could put China tech higher than where it is today.”

At Invesco, Hooper oversees $1.2 trillion in assets and she is bullish on the “BATS.” The “BATS” include Baidu, Alibaba, Tencent Holdings, and Sina.

“Certainly, China tech, in general, looks good, but I think those large tech names are best positioned,” added Hooper. “Valuations are so low. We look at it from a price-to-sales ratio standpoint. Just screaming buys in China.”

What does Hooper think about tech companies in the U.S.? Hooper believes that this current economic cycle is working out well. Hooper warned that the tech stocks in the U.S. may not perform well in the next couple of weeks. But she believes that this coming quarter will see “solid performance” due to “an accommodative Fed environment.” But the major U.S. indexes may have a volatile ending to the year due to policy uncertainty.

Many investors have been wondering about what happened with lower-performing newly public tech stocks like Uber and Peloton along with the canceled WeWork IPO. In an interview with Business Insider, Hooper believes that the response to those stocks has been encouraging since it “feels very different than the IPO market of the late 1990s.”

Hooper also points out that it is a good sign that Wall Street is scrutinizing the raw numbers of those companies rather than just sending the stock price north.

And Hooper’s comments come at a time as the U.S. stock market hit record highs this past week due to optimism around the belief that the trade war peaked, a belief that a global recession may not happen in 2020, and actions by the Fed. Plus investors are expecting corporate profits to have a better 2020 than the past few years.

“I am of the opinion that neither the U.S., nor the global, economy are facing a recession through the end of 2020,” said Edward Yardeni, head of Yardeni Research via The Washington Post. “The market rightly anticipates Trump wants another term as president, and he’s got enough going on with impeachment issues that he wants to put trade on the back burner for a while.”

Hooper told The Washington Post that this stock rally was justifiable due to comments made by Fed Chair Jay Powell about the high bar for raising rates.

Featured image credit: Kristina Hooper