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North Korea Signs Denuclearization Treaty: 5 Asian Picks

Nitish Marwah
North Korea's Kim Jong-un and South Korea's Moon Jae-in signed an accord, which also speaks about filing a joint bid for hosting the Olympics.

After having pledged to improve their mutual relationship toward stabilizing the Korean peninsula, leaders from North and South Korea finally agreed on denuclearizing North Korea. North’s Kim Jong-un and South’s Moon Jae-in signed an accord, which also speaks about filing a joint bid for hosting the Olympics.

Further, the Asia Development Bank remains upbeat about the outlook for Asia’s economy through 2019. Additionally, the Bank of Japan (BoJ) decided to keep interest rates unchanged and offered a rosy view of its economy.

Under circumstances where Asia is expected to grow immensely despite global trade war woes, adding stocks from the region should fetch stunning returns.

North and South Korea Agree on De-escalation

On Sep 19, after a meeting in Pyongyang, leaders from the respective countries "agreed on a way to achieve denuclearization.” South Korea’s Moon Jae-in stated that his counterpart from the North had "agreed to permanently close the Tongchang-ri missile engine test site and missile launch facility." He also stated that, to keep the procedure transparent, North Korea would move ahead with the plan in presence of experts from “relevant nations.”

Jae-in also stated that Kim Jong-un has agreed to close its Yongbyon nuclear facility. Further, defense chiefs from both countries signed a 17-page agreement, pledging to "cease all hostile acts against each other."

The two parties also agreed to file a joint bid to host 2032 Summer Olympics and establish roads between North and South Koreas in a year’s time. Moreover, they vowed to stop military drills against each other along the Military Demarcation Line by Nov 1 and remove 11 guard posts in the demilitarized zone by this year’s end.

Asia’s Economic Outlook Strong

In a report published on Asian Development Outlook (ADO) 2018, the Asian Development Bank (ADB) stated that it remains positive on its outlook for the region’s economy. The body predicted that overall growth in Asia is expected to be around 6.5% in 2018 and 6.4% in 2019.

Further, per a report by Japan’s Ministry of Finance on Aug 27, corporate capital expenditure in the country surged to its highest levels since 2006 in the April-June period. On Sep 19, the Bank of Japan announced that it was keeping its short-term interest rate unaltered at -0.1%. The BoJ also stated that it plans on keeping rates low in the long term.

5 Winning Asian Picks

Denuclearization of the Korean peninsula, Japan’s resilience to trade war woes and ADB’s confidence in Asia’s economic growth, there are multiple reasons for investors to consider stocks from the region.

In this context, we have selected five stocks that are expected to gain from these factors. These five stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sony Corporation SNE is the designer, developer and producer of electronic equipment, instruments and devices.

The company is based out of Tokyo and sports a Zacks Rank #1. The expected earnings growth rate for the current year is 26.75%. The Zacks Consensus Estimate for the current year has improved 8% over the last 60 days.

Honda Motor Co., Ltd. HMC is the manufacturer and distributor of motorcycles, automobiles, power products and other related products.

The company is based out of Tokyo and carries a Zacks Rank #1. The Zacks Consensus Estimate for the current year has improved 4.1% over the last 60 days.

Leju Holdings Limited LEJU is a provider of online to offline (O2O) real estate services in China.

The company is based out of Beijing and has a Zacks Rank #2. The expected earnings growth rate for the current year is 81.82%. The Zacks Consensus Estimate for the current year has improved 51.7% over the last 60 days.

Noah Holdings Limited NOAH is a provider of wealth and asset management services to high net worth individuals and enterprises in China.

The company is based out of Shanghai and has a Zacks Rank #1. The expected earnings growth rate for the current year is 8.89%. The Zacks Consensus Estimate for the current year has improved 6.9% over the last 60 days.

21Vianet Group, Inc. VNET is a provider of carrier-neutral Internet data center services to internet companies, government entities, as well as blue-chip enterprises.

The company is based out of Beijing and has a Zacks Rank #2. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 60 days.

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