Fund Manager Who Beat 98% of Peers Says Stay Calm and Buy Stocks

(Bloomberg) -- Trade war? Yes. Global slowdown? Yes. Volatile market? Yes. But does that mean investors should cash out and run? Not this top-performing fund manager. She’s staying put.

Joanna Kwok, who co-manages the JPMorgan Asia Growth Fund, says volatility will linger in Asia markets due to trade war uncertainty and corporate earnings concerns. Even with the unpredictability of U.S. President Donald Trump and other political risks, investors should hang on as valuations suggest “decent” returns in the next 12 months, she said.

“You just need to be continuously disciplined,” said Kwok, whose fund tracking the MSCI Asia excluding Japan Index has returned 11% year-to-date. “At this valuation, we should be buying not selling.” Kwok’s open-end fund has beaten 98% of peers so far this year and for the past five years, based on data compiled by Bloomberg,

After wiping out as much as $1.7 trillion of their value in the recent sell-off, Asia stocks have barely recovered losses triggered by Trump’s threat to impose a 10% tariff on more Chinese imports and concerns of a recession, re-ignited by an inversion in yield curves. While fund managers and strategists agreed that volatility will remain, few have shown the conviction to buy even those stocks trading at attractive prices.

Kwok, however, remains almost fully invested, with a net cash level of about 2%. As a long-term investor, she prefers regional growth stocks that are more domestically focused in financial, technology and consumption-related businesses. Market declines over the past few months enabled her to buy back some technology and Indian financial equities, she said.

The MSCI Asia excluding Japan Index is trading at 1.3 times its estimated 12-month price-to-book ratio, slightly below its five-year average, Bloomberg data show.

Other comments from Kwok:

• Kwok trimmed some ASEAN consumer and China property management stocks
• Central bank accommodative measures would be more effective in buoying sentiment if coupled with fiscal policies; this is happening in India, China and Thailand
• While risk-off sentiment still dominates Asia markets, Kwok says flows are resuming from North America and Europe as valuations become attractive
• Specific industry trends, such as insurance expansion in China and India, will drive Asian growth over the long term

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