Goldman Sachs updated its confidence list of top Asia-Pacific stocks this month, adding some stocks and removing others. The bank remains optimistic about the region, noting that the outlook for the current quarter is positive. “There are five factors that could affect the performance of Asian markets in the second quarter: the beginning of the Fed-led rate cutting cycle; elections and geopolitics; first-quarter earnings results; market-specific policies; and (less likely) Basic but noteworthy) seasonality,” analysts at the investment bank wrote in an April 7 note. Looking ahead, they expect earnings growth for the MSCI Asia Pacific ex Japan Index (MXAPJ) to reach 15% in 2024 and 11% in 2025. Key trading themes they focus on include secure shareholder returns, beneficiaries of policy easing and opportunities in artificial intelligence and defense stocks. Two items were added and two were removed from Goldman’s list of Asian convictions: China Resources Beer Goldman Sachs analyst Leaf Liu said he was optimistic about the prospects for Chinese beer maker and distributor China Resources Beer. Brands it owns or shares in include Blue Sword, Luye, New Samsung, Tianjin, Heineken, etc. The analyst wrote: “Despite facing multiple unfavorable factors such as macro weakness, consumption downgrade and China’s deflationary environment, China Resources Bank achieved relatively resilient earnings per share growth driven by the solid advancement of its premiumization process.” He believes the brewer’s “risk/reward is increasingly attractive” and expects the company to “gain the largest incremental market share among peers in the premium beer space.” China Resources Beer’s share price has fallen by about 45% in the past 12 months. Goldman Sachs set a 12-month price target on the stock at HK$51 ($6.51), giving it potential upside of about 46%. The life insurance company’s shares trade in the Kraft MSCI All China Index ETF (weighting 0.4%) and the Franklin FTSE China ETF (weighting 0.3%). NTPC Indian power generation company NTPC (formerly National Thermal Power Corporation) is another new addition to Goldman Sachs’ list of convictions. Analyst Apoorva Bahadur said the company would benefit from worsening power shortages and the broader transition to renewable energy. NTPC said on its website that it has an installed capacity of over 75 GW and plans to increase this to 130 GW by 2032. Bahadur believes its renewable energy business has the potential to be “re-rated, with the company benefiting from lower module prices,” progress on new energy initiatives and potential monetization. Shares of the power generation company have gained nearly 104% over the past 12 months. Goldman Sachs has given the stock a 12-month price target of INR 395 ($4.74), implying a potential upside of 8.8%. Meanwhile, the company The Wall Street bank removed two pharmaceutical companies – Japan’s Shionogi and China-based Chunghwa Medical Systems – from its list of convictions. — CNBC’s Michael Bloom contributed to this report.
