June 23, 2020 / 5:41 AM / a month ago

Credit Suisse sees Hong Kong stocks, Asian credit among top bargains this year

SINGAPORE, June 23 (Reuters) - Asian credit and Hong Kong stocks are among the best buys for investors this year, and the region is set to benefit from a falling U.S. dollar, Credit Suisse said on Tuesday.

The Swiss investment bank expects a swift global recovery from the coronavirus crisis, with the steepest rebounds in Europe and the U.S., and encouraged clients to seek out risk.

The call follows similarly bullish forecasts from Morgan Stanley and Citi, among others, just as global markets pause a rally that has carried world stocks some 40% higher since March.

“We think investors should be engaged in markets, and pro-risk in general,” Ray Farris, Credit Suisse’s chief investment officer for South Asia, told journalists on a conference call.

With monetary policy accommodative and signs of recovery in growth, underperforming markets - such as Asian equities - will find support, Farris said, calling out Hong Kong in particular.

Issues from U.S.-China tensions to discontent on the streets have hit prices hard, despite most Hong Kong-listed stocks being exposed to China far more than to the local economy.

“That bad news is very much in prices,” Farris said. “Hong Kong, at these valuations, is an attractive, interesting opportunity.”

The bank also pointed out Asian investment-grade credit spreads are about 130 basis points wider than those in the U.S., where the Federal Reserve has been buying - a gap it expects to close as liquidity fans out to Asia in coming months.

It also expects the U.S. dollar to weaken to $1.2000 per euro over the next 12 months as European economies recover. It forecast the dollar falling to 1.34 Singapore dollars and 6.90 yuan, moves beneficial for local trade balances and likely to lure investors.

A dollar last bought 1.3940 Singapore dollars, 7.0701 yuan and traded at $1.1264 per euro.

Reporting by Tom Westbrook; Editing by Rashmi Aich

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