HONG KONG, Nov 26 (Reuters) -
* Asset manager BlackRock has gone defensive in Asia’s stock market, favouring sectors such as telecoms, as it braces for slower economic growth next year, the company said in a report on 2020 Asia investment views on Tuesday.
* Sees slower global growth, lower returns in 2020, and the U.S. presidential election to be a key uncertainty alongside trade, geopolitics. Says markets are not priced for an economic setback.
* Adding defensiveness in the Asian stock market has been an “overarching theme” for the U.S. money manager.
* Likes telecoms. Exposure to the sector is now in high single digits in “a typical BlackRock Asian equity portfolio.” Says “we have bought telecom stocks we had not touched in years.” Also likes certain healthcare companies.
* Significantly decreased exposure to the financial sector where “vulnerabilities would be most evident if the global economy downshifts meaningfully.”
* Expects stronger U.S. dollar as growth slows and investors seek refuge in safe havens.
* Trimmed overweight equity positions in markets such as India and Indonesia which rely heavily on U.S. dollar debt. Favours those less reliant such as Taiwan and Thailand.
* Says Asian bonds “attractive” for global investors in a world “with few income sources”.
* Favours local currency bonds in India, Indonesia amid accommodative central banks.
* Overweights China’s state-owned enterprises (SOEs) in investment grade, cites strong demand and tight supply, and consolidation of strategically important SOEs.
Reporting by Noah Sin; Editing by Christian Schmollinger