Value investor reveals what to buy as Trump tariffs loom
News that U.S. President-elect Donald Trump’s plans to hike tariffs on imports from China, Canada and Mexico sent ripples across global markets Tuesday. Asian markets traded broadly lower , but Chinese stocks held up surprisingly well. Hong Kong’s Hang Seng Index ended the day slightly higher, while mainland China’s blue-chip CSI 300 finished just 0.21% lower. Peter Boockvar, chief investment officer at the U.S.-headquartered Bleakley Financial Group, said China is better prepared to cope with tariffs than in 2016. “It’s not going to be good for anybody, but in terms of relative to where they were, I think they can handle this much better because U.S. exports are a much smaller percentage of China’s total exports compared to six years ago,” he told CNBC’s “Street Signs Asia” on Tuesday. Instead, the value investor believes American companies are the ones that will be hit hard. Referencing the impact of the tariffs imposed by the Trump administration in 2016, Boockvar said it was “negative, not a benefit” in aggregate. “What I saw was a tariff battle that took the U.S. manufacturing sector into recession. And while maybe some sectors like steel and aluminum, for example, were protected to an extent, all the users of steel and aluminum suffered, and their costs went up,” he said. “Here we go again … down that same road, somehow expecting a different result.” U.S. small mid-cap plays Against this backdrop of tariffs — and a world of potentially higher prices, interest rates and a stronger dollar — Boockvar said he is looking to “cheaper parts” of the U.S. market, including small and mid-caps, commodities, energy and fertilizer stocks. Small and mid-cap names are the “most attractive part of the U.S. market,” he added, given that they offer good value, unlike large-cap stocks like Nvidia and Microsoft which “have not traded well … since 2Q earnings.” “The market has finally discovered that there are more than just seven stocks to focus on, and I think that explains the recent outperformance in the small caps and mid caps,” Boockvar explained. The Russell 2000 of small-cap U.S. stocks is up almost 22% since the start of the year — not far off the S & P 500 ‘s 25% returns. Stocks on his watch include natural gas producer EQT , as well as Nutrien and Mosaic in the agriculture space. ‘A lot of value’ Beyond the U.S., Boockvar said Asian markets including China, Japan, Singapore and Vietnam were offering “a lot of value.” Stocks on his radar include casino and resorts company Las Vegas Sands Corp — which operates Singapore’s Marina Bay Sands hotel cum casino — and Melco Resorts & Entertainment , which has several casino and gaming facilities across Asia and Europe. Boockvar is also bullish on insurer AIA Group which is listed on the Hong Kong Stock Exchange and trades as an American Depositary Receipt under the ticker AAGIY .
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