This week’s stockmarket plunge has handed investors a rare opportunity to buy stocks at bargain-basement prices, say analysts.
The Wall Street tsunami, exacerbated by high-frequency computerised selling, has brought share prices down below their true level in many cases.
With both the US and the global economy in strong shape, the sell-off was unexpected and prompted by excessive profit-taking on the back of interest-rate-rise fears, says Royston Wild of The Motley Fool.
He cites the latest figures from the National Institute of Economic and Social Research that show economic growth increasing at its quickest pace since 2011. It now believes the world economy expanded 3.7% last year, up 20 basis points from its November estimate.
“There were plenty of dirt-cheap FTSE 100 shares for share selectors to choose from before the sell-off, and now the investment case for many of these companies is even more compelling,” he says.
Wild tips construction giants such as Taylor Wimpey, Barrett and Berkeley, and pharma giant GlaxoSmithKline, among others.
Vassilis Papaioannou, chief investment officer at London-based investment firm Dolfin, told CNBC the current market levels represent “an excellent buying opportunity”.
Look to eurozone
He advised investors to focus on company fundamentals and earnings growth. “Don’t forget it is still earnings season – investors should look out for buying opportunities,” he said.
“We favour the eurozone and the US, but predominantly the eurozone looks very interesting,” he said. “Within the eurozone we favor banks, consumer and energy, because it makes absolute sense what we have seen – this continuation and this full-speed recovery that has been taking place in Europe should be reflected in the equity markets.”