Markets on Monday experienced turbulence not seen in years. In Japan, it was nothing short of a bloodbath. Its stock market posted its worst drop since Wall Street’s “Black Monday” in 1987, and the contagion spread to other Asia-Pacific markets, which also posted severe declines. Similarly, U.S. and Europe markets fell sharply , though they bounced back on Tuesday. Ted Alexander, chief investment officer at BML Funds, said that investors have “no reason to panic.” The market tumble in all those regions has been attributed to several factors: U.S. recession fears, the Bank of Japan’s hawkish pivot, the crash in the yen “carry trade,” and the ongoing rerating of the tech sector. The Bank of Japan last week raised interest rates, contributing to a rise in the yen. That’s affected the practice of traders borrowing in the cheaper currency to purchase other global assets. “So the yen was way too cheap, and a lot of stocks were getting a bit expensive compared to fundamentals. So for both markets, this is the kind of shake up that was needed for people to adjust their risk appetite and come up with a sensible level of diversification. Carry trade is a risky trade,” Alexander said. “But I think what we’re seeing here is a temporary issue that will present some really good, longer term chances,” he told CNBC’s ” Street Signs Asia ” on Monday. Greg Halter, director of research at Carnegie Investment Counsel, said the key to investing is to think long term. “Yes, we are going to have this volatility along the way, but we can actually use that volatility to buy some of these names that have pulled back for what may be unwarranted reasons,” he told CNBC’s “Street Signs Asia” on Tuesday. CNBC Pro takes a look at what the pros are saying about buying opportunities that may also allow investors to stay defensive in any downturn. Buying opportunities Halter likes the real estate sector, giving two stock picks. He named cell tower company American Tower and W.P. Carey , a REIT. He said W.P. Carey has had very good occupancy rates for the past 50 years — at a consistent 98% or 99%. “So they have a very good track record of working through all kinds of economic environments. And this is what we leave the management of these companies to do is run the company to be able to manage through these environments,” he said. Investors have recently been moving into real estate stocks as expectations of interest rate cuts grow as well. Alexander says he likes health-care stocks, which he noted belongs to the more defensive part of the market. “I think healthcare’s had the best earning season so far,” he said. “They’re very cheap at the moment, and so they’re in less danger of getting beaten up if we do see downside.” He likes pharmaceutical firms Novartis as well as Johnson & Johnson . Yen beneficiaries Historically, when the yen is strengthening, sectors in Japan that have done well are domestic ones such as retail, food and beverage and household products, as well as exporters in health care and entertainment, Bernstein said. Autos tend to be the most negatively affected, it said. “We believe the need to hide into defensives and domestics is more important than having a strong preference towards large vs. mid vs. small in Japan right now,” Bernstein wrote in an Aug. 5 report. It produced a “defensive” screen of stocks, five of which it gave an outperform rating. They are: Nintendo , Capcom , Nexon , Chugai Pharmaceutical and Keyence . — CNBC’s Michael Bloom, Samantha Subin contributed to this report.
