Markets on Monday experienced turmoil not seen in years. In Japan, it was a bloodbath. Its stock market suffered its worst decline since Wall Street’s “Black Monday” in 1987, which spread to other Asia-Pacific markets, which also suffered severe losses. Likewise, U.S. and European markets also fell sharply but rebounded on Tuesday. Ted Alexander, chief investment officer of BML Funds, said investors had “no reason to panic.” The market routs in all these regions have been attributed to several factors: U.S. recession fears, the Bank of Japan’s hawkish stance, the collapse of the yen “carry trade” and the continued revaluation of the technology sector. The Bank of Japan raised interest rates last week, boosting the yen’s appreciation. This affects the practice of traders borrowing cheaper currencies to buy other global assets. “So the yen is too cheap and a lot of stocks are getting a little expensive compared to fundamentals. So for both markets, it’s an adjustment that’s needed for people to adjust their risk appetite and come up with a new scenario that makes sense. level of diversification is a risky trade,” Alexander said. “But I think what we’re seeing now is a temporary problem that will lead to some very good, long-term opportunities,” he told CNBC’s “Street Signs Asia” on Monday. Greg Holt, research director at Carnegie Investment Advisors, said the key to investing is long-term thinking. “Yes, we’re going to have that volatility along the way, but we can actually use that volatility to buy some stocks that are pulling back for reasons that may be unfounded,” he told CNBC’s “Street Signs Asia” on Tuesday. ” CNBC Pro takes a look at what the pros have to say about buying opportunities that could also keep investors defensive during any downturn. Buying Opportunities Halter likes the real estate sector and gives two stock picks. He named cellphone tower companies American Tower and WP Carey as real estate investment trusts. He said WP Carey’s occupancy rate over the past 50 years has been very high, always at 98 or 99 percent. “So they have a very good record of dealing with a variety of economic environments. That’s what we leave to the management of these companies to do, is to enable the companies to manage in these environments,” he said. Investors have recently begun turning to real estate stocks as expectations of interest rate cuts grow. Alexander said he likes health care stocks, which he noted are among the more defensive parts of the market. “I think health care is having its best earnings season yet,” he said. “They’re very cheap right now, so if we do see a downside move, they’re in less danger of getting hit.” He likes pharmaceutical companies Novartis and Johnson & Johnson. Historically, when the yen is strong, Japan’s industries that perform well are domestic industries such as retail, food and beverages and home products, as well as health care and entertainment exporters, Bernstein said. Cars tend to be the most negatively affected, the report said. “We believe that the need to hide in defense and the domestic market is currently more important in Japan than the strong preference for large companies, mid-sized companies and small companies,” Bernstein wrote in an Aug. 5 note. . It has a “defensive” screen on stocks, with five stocks given an outperform rating. They are: Nintendo, Capcom, Nexon, Chugai Pharmaceutical and Keyence. —CNBC’s Michael Bloom and Samantha Subin contributed to this report.
