CLSA is touting a portfolio that lets you bunk off watching the Fed

Forget sell in May and go away. CLSA Ltd has come up with a list of stock picks they say would work were you to buy in May and go away — for the next 10 years.

The laziest of investment mantras gets treated to this even lazier twist by the company's Australia-based investment strategist Damian Kestel, who submitted the following question to his colleagues: “If you had to buy and hold 1 stock under CLSA coverage in your country or sector for the next 10 years, which would it be?”

The thought experiment produces an Asia-Pacific portfolio that's a mixture, he says, of long-term structural growth stories and industry leaders with well-defended advantages that will outperform the index over a (very) long-term horizon.

With the MSCI Asia Pacific index hovering at levels less than one percent changed from where they stood exactly a decade ago, there's a clear appeal for value picks like those which he calculates will add more than a $1 trillion to their market cap by 2026, even assuming earning-per-share growth for the next ten years that's half that of the last ten.

The elaborately illustrated research note published on Friday has some memorable moments, such as the head of Korean research apologizing for the continuing appeal of Samsung Electronics Co. ("I hate to be boring"), a managing director in sales emoting about Seven & i Holdings Co. ("the most ignored global consumer company on earth"), and the fact that no one chose a Chinese bank.

Here are some of CLSA's 10-year picks:

Financials

"On asset quality China banks look bad, but scarily the IMF have some data sets showing Asia ex-China looks even worse," says Brian Johnson, CLSA's head of financials, arguing that a repeat of the 1997 Asia crisis looks increasingly likely. Against that backdrop he opts for Macquarie Group Ltd. "It's more than just a plain vanilla global investment bank," he says, and is less vulnerable to disruption and asset quality cycles than traditional lenders.

Thai Stocks

Bold plans for mass transit make Bangkok Expressway and Metro PCL the top pick of Suchart Techaposai, CLSA's head of research in Thailand. The company stands to benefit from a plan to increase the transit network six-fold to over 500km, "As the sole operator of underground metro trains, BEM has the experience and know-how to dominate future MRT tenders," he writes.

Resources, Reluctantly

"I tend to think investors have, at best, six months visibility in the resources sector," says energy analyst Andrew Driscoll, chastened perhaps, by the turmoil that's destroyed value in commodities over the last two years. He chooses Rio Tinto Ltd., citing its valuation and growth prospects — "but given where we are in the cycle, I think returns are going to be better with a trading-orientated, rather than long term buy and hold investment strategy"

Source:
courtesy of BLOOMBERG

by Isobel Finkel

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