Stock market investors can look to Asia

NEW YORK – As stock investors hunt for higher returns in light of what some call a “new normal” of reduced expectations, analysts point to increased demand for goods from China and other emerging markets as a logical approach.

If the U.S. economy is coming into a sustainable recovery, even with lower growth rates, it follows that the outlook bodes well for stocks in those sectors in which businesses spend – namely, technology, basic materials and industrials, said Doug Lockwood, chief investment officer at Cornerstone Wealth Management. Demand will come “not just from our U.S. economy, but from a lot of these emerging markets ...” he said.

that will need more than they can produce in their own country,” the adviser said.

“There’s a huge list of companies that have a large multinational footprint that were helped by the declining dollar and surging demand, particularly from Southeast Asia,” said Fred Dickson, chief market strategist at Davidson Cos.

Early in the current reporting season, companies including blue chips Intel Corp. and Johnson & Johnson reported “terrific results” in large measure because of increased demand from emerging markets, said Dickson.

Dickson also lists IBM, General Electric Co., Google Inc. and Alcoa Inc. as among the beneficiaries of the trend.

China has rapidly invested stimulus money into rebuilding the country’s infrastructure, with their industrial production numbers up about 10 percent year-over-year, Dickson said.

“The massive amount of dollars they’ve poured into consumer and corporate development request a lot of products, and we are still a large exporter of products into that part of the world,” said the analyst.

Companies with large financing operations in Southeast Asia have also reported gains from their international exposure, including Bank of America Corp., Citigroup Inc., JPMorgan Chase and Goldman Sachs Group Inc., Dickson said.

Also illustrating the scenario, the chairman of Emerson Electric Co. on Friday reportedly said the industrial conglomerate expects emerging markets including China, India and Southeast Asia to make up for as much as 45 percent of its sales within five years.

On Wall Street, the major benchmarks retreated sharply, reversing course after their biggest single-day jump in more than three months. Financials shares were hardest hit in the face of a possible bankruptcy by commercial lender CIT Group Inc.