Many companies will find a higher-interest-rate environment very difficult to operate in — as demonstrated by the Silicon Valley Bank crisis, according to Anthony Doyle, head of investment strategy at Firetrail Investments. He said investors should take heed and adopt an active stock-picking approach instead. “It is not a time to be taking beta and index exposure in a higher-interest-rate and a higher-cost-of-capital world,” Doyle told CNBC’s “Street Signs Asia” on Monday. “There will be winners and there will be losers and part of the challenge for investors today is identifying which are those companies that will find this environment much more difficult than they have done in a zero-interest-rate world.” It comes after financial regulators closed Silicon Valley Bank and took control of its deposits, in what is the largest U.S. bank failure since the global financial crisis over a decade ago. SVB was a major bank for tech and venture-backed companies, which are under pressure due to higher interest rates. The U.S. Federal Reserve has hiked rates eight times in the past 12 months. Stock picks Doyle said he’s cautious on tech right now, and his firm is underweight in that sector, but he identified three stocks in the space that he’s bullish on. One is Microsoft , which he called a “quality, sort of defensive-style company” with its cloud business. The other two are semiconductor firms: Micron and Taiwan Semiconductor Manufacturing Company . “We expect the market to tighten up despite some of the glut of semiconductors that we’ve seen more recently. We expect that market to tighten up very, very quickly and structural demand for those products to remain in place for many years to come,” Doyle said. — CNBC’s Hugh Son and John Melloy contributed to this report.
