Invesco’s Kristina Hooper sees important alternatives in areas shunned by a majority of traders.
Despite the new omicron wave, she lists rising markets — together with China — as 2022’s high locations to place cash to work.
“We all the time knew it will take longer for rising markets to get populations vaccinated. However clearly there’s a ramp up occurring, and it’ll proceed nicely into 2022,” the agency’s chief world market strategist informed CNBC’s “Trading Nation” on Monday. “So, which means 2022 needs to be for rising markets what 2021 was for developed markets when it comes to taking part in a extra strong reopening of their economies.”
To date this yr, the iShares MSCI Emerging Markets ETF, which tracks giant and mid-sized publicly traded corporations in growing areas, is dramatically underperforming the S&P 500. The ETF is off 6% up to now this yr whereas the S&P 500 is up 24%.
Hooper acknowledges investing overseas in locations similar to China takes braveness.
“There’s this standard knowledge that China is uninvestable. It isn’t uninvestable,” mentioned Hooper, who’s significantly bullish on the nation’s tech trade.
China’s lawmakers are within the midst of a serious regulation crackdown as part of its “common prosperity” push. Beijing regulators are in search of extra management over industries together with tech, gaming, e-commerce and training.
“Laws have been focused on particular areas that sync with long-term coverage aims by the Chinese language authorities,” she mentioned. “We’re nearer to the tip of any important sequence of rules than we’re in direction of the start. That is very a lot a shopping for alternative. I feel it is an actual contrarian play.”
In additional of a mainstream take, Hooper is bullish on U.S. shares, too. To date, she’s additionally not overly frightened concerning the new Covid-19 omicron strain right here both.
“This does appear to be very contagious, however very gentle. And so, it means that we’re unlikely to see lockdowns,” she mentioned. “The metric to observe proper now within the absence of lockdown… is mobility. And, mobility has hardly been affected when it comes to people getting out, taking part in purchasing [and] eating places.”
Hooper believes Federal Reserve insurance policies will not derail the risk-taking surroundings both.
“The U.S. is prone to see a deceleration in its financial system because the Fed begins to tighten, and naturally, as we see fiscal stimulus eliminated,” famous Hooper. “We’ll nonetheless probably stay above development when it comes to development.”
And, that is the place Hooper’s outlook takes one other contrarian flip. One in every of her main calls includes U.S. tech stocks outperforming cyclicals. In line with Hooper, there is a extensively held assumption on Wall Avenue that tech is a safer asset class.
“We might definitely see cyclicals outperform within the shorter time period given what I count on to be a powerful December,” Hooper mentioned. “However I do imagine for the overwhelming majority of 2022, we will see secular development [and] defensives, especially technology, perform better.”
The tech-heavy Nasdaq is up 20% up to now this yr, and 125% for the reason that pandemic low.