Telecommunications stocks in Asia could be the next area of opportunity for investors in 2020, according to BlackRock. Turning the spotlight on the sector in its outlook report for 2020, BlackRock’s head of global emerging markets equities Andrew Swan wrote: “We have bought telecom stocks we had not touched in years … A typical BlackRock Asian equity portfolio exposure to telecom is now in the high single digits.”
That’s based on companies that BlackRock has identified in India, Singapore and China, according to Swan. The asset manager says telco stocks will prove resilient and expects the group to meet or even “modestly best” earnings expectations. Swan said BlackRock sees “greater than market returns” for those stocks.
“We see continuing macro weakness and with that earnings risk in the broader market. In this environment Telecom stocks provide earnings resilience especially where they have the ability to fend off pricing competition or benefit from growth initiatives in 5G,” he wrote in an email to CNBC. Many operators are likely to focus on cost-cutting in 2020, via measures such as asset sales and network-sharing, according to a Economist Intelligent Unit report on Wednesday. Raising cash will be the main goal, but telcos will also be trying to revive their average revenue per user numbers, which has stagnated for years in many markets, said the report.
BlackRock is bullish on Asian telecom for 2020, says it bought stocks it had ‘not touched in years’, CNBC, Dec 5