Goldman Sachs Updates Top Picks in Asia Pacific: Xero and Hyundai Motor Added, OCBC and Sony Removed

Goldman Sachs refreshed its "conviction list" of top picks in Asia Pacific for March, adding and removing key stocks as the market landscape continues to shift. The bank struck an optimistic tone on the region, noting that markets had rebounded from January losses and were now trading flat year to date. Analysts emphasized the wide market, sector, and factor performance disparity in the region, noting a less pronounced large-cap bias compared to the U.S. This disparity was seen as a significant opportunity for intra-regional investments. Earnings delivery is expected to be a driving force behind share performance, with valuations broadly aligning with macroeconomic conditions. Key trading themes identified by Goldman Sachs include global exposure, earnings delivery, a focus on value, and leveraging opportunities in the field of artificial intelligence. Two new additions to Goldman's conviction list stand out as promising investment opportunities: Xero, a New Zealand-headquartered accounting software company, has captured the attention of analysts for its positive outlook for profitable growth and global earnings ramp. While challenges lie ahead, such as competition with Intuit's Quickbooks and Sage, Goldman Sachs has set a price target of $152 for Xero, representing a potential upside of around 12%. Hyundai Motor, on the other hand, has been gaining traction due to fundamental improvements in U.S. market share, a diversified powertrain strategy, solid EV margins, and increasing shareholder returns. Analysts view the risks associated with weakening end demand and EV slowdown as already priced in. Goldman's price target of 290,000 Korean Won ($221.36) for Hyundai Motor suggests a potential upside of around 20%. As part of the refresh, Goldman removed OCBC and Sony from its conviction list, no longer deeming them as top investment ideas for the foreseeable future. The bank continues to monitor the dynamic market conditions and remains focused on identifying compelling investment opportunities for its clients in the Asia Pacific region. Overall, as markets in the region continue to evolve, Goldman Sachs remains vigilant in its analysis and recommendations to guide investors through the ever-changing landscape of the Asia Pacific market.