Fidelity, Goldman Find Tariff Haven in Asian Consumer Stocks

Winnie Hsu, Sangmi Cha and Abhishek Vishnoi

Sat, Apr 19, 2025, 6:00 PM 4 min read

Strategists at Goldman Sachs Group Inc. and Morgan Stanley recommended Asian consumer staples in reports released after the April 2 tariff barrage, urging investors to turn defensive. Fidelity International said it snapped up battered Chinese consumer stocks, betting the companies will benefit from government stimulus.

The MSCI Asia Pacific Consumer Staples Index has risen 5% since April 2, the best performance among 11 sectors and beating the broader benchmark’s 2.5% drop. Supermarket chains Yonghui Superstores Co. in China and Kobe Bussan Co. in Japan have risen at least 19% each, while some other beverage and dairy makers have also done well.

It’s a sharp reversal in fortunes for the sector, which had languished as an AI frenzy catapulted tech shares over the past couple years. It underscores a rotation away from growth stocks as US-China trade tensions threaten a global economic slowdown. The cohort is also getting a boost from signs that Asian governments are ready to roll out fiscal stimulus to support spending.

The outperformance signals a “shift in investor mindset from chasing global growth and exports to seeking shelter in domestic demand resilience,” said Charu Chanana, chief investment strategist for Saxo Markets in Singapore. “Investors are starting to price in a more fragmented, protectionist world,” where local policy support and consumption matter more, she said.

While a protracted trade war would spare few sectors, consumer staples have shown resilience in times of economic stress. It also helps that the sectoral benchmark fell for four straight years through 2024, compared to the MSCI Asia information tech gauge’s largely uninterrupted multi-year advance since 2019, suggesting room for catch-up.

The nascent rotation may extend as fiscal stimulus plans are unveiled. Chinese authorities recently listed 48 measures to expand household spending in catering and healthcare, among others, while South Korea raised its supplementary budget plan to 12 trillion won ($8.4 billion). In India, forecast of an above-normal monsoon is expected to improve rural demand.

Fidelity International took advantage of the plunge in Chinese and Hong Kong stocks on April 7 to boost holdings in consumer staples and some travel-related discretionary names, said Terrence Kan, a client portfolio strategist. He favors mainland-listed shares over Hong Kong-traded ones, given the former may benefit more from Beijing’s support measures.

Asian consumer stocks have also fared better than peers in the US and Europe during the market turmoil, thanks to prompt vows of policy support.

In an April 6 report, Goldman strategists raised their recommendation for Asian consumer staples to overweight from market weight, saying they are tilting more “domestic and defensive.” JPMorgan Chase & Co. strategists took a similar move for the cohort in Southeast Asia on Thursday.

“Consumer staples is not an industry where demand fluctuates greatly,” and there are relatively few names with a large exposure to US exports, said Hironori Akizawa, chief investment officer at Tokio Marine Asset Management International Pte. “A positive scenario would be that central banks will move to cut interest rates, stimulating consumption.”

In contrast, shares of discretionary goods have suffered on expectations that households will cut back on non-essential spending. The MSCI Asia gauge for consumer discretionaries has fallen over 5% since April 2, the second biggest drop among sectors.

A risk for consumer staples would be a flare-up in inflation, which can curb enthusiasm for the sector, according to James Thom, senior investment director of Asian equities at Aberdeen Investments.

For now, however, a consensus is forming that staples is a safer bet. The sectoral gauge is expected to offer twice the earnings growth that the MSCI Asia Pacific Index may deliver over the next 12 months.

“Staples will remain a focus for investors in these conditions, whereas we could see a switch back to the likes of discretionary and service sectors if risk appetite comes back,” said Nick Twidale, chief market analyst at AT Global Markets in Sydney. “I feel this will only occur with a change from the US on tariffs.”

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