Global markets are reeling from the news of a housing collapse in China. Fears of property giant Evergrande going under smothered by $300bn in liabilities has triggered a global sell-off. But, I think this presents a good opportunity to cash in on some stable FTSE 100 shares at bargain prices.
Biggest FTSE 100 bargain
The Prudential (LSE: PRU) share price fell 6.1% in the past week as a direct result of market turbulence in Asia. Its holdings in China triggered a panic sell-off, offering a cut-price FTSE 100 option for my portfolio.
The asset management and insurance firm recently shed operations in America and Canada to focus on Asia and Africa. This strategy has served the company well with sales in these growing markets up 17% to $2.08bn. The half-year (H1) 2021 report showed strong financials with operating profits of $1.5bn up 19% from H1 2020.
The company is working on growing its digital platform, Pulse, which currently has 30m registered users. The platform also brought in $158m in H1 2021 and the company expects 50m registered users by 2025.
I’m buoyed by the company’s renewed focus in Asia. The spending potential is growing in countries like India, Indonesia and Singapore, making them attractive markets for the insurance sector.
The growing economic uncertainty in China and another Covid outbreak could halt its progress, of course. Also, its share price has been rocky in recent times, offering an underwhelming 12% return over five years. But at 1355p, I think it’s an excellent FTSE 100 bargain option for my long-term portfolio given its market share and recent performance.
Reliable FTSE 100 performer
Diageo (LSE: DGE) shares are down 1.7% in the last month. The multinational alcohol brand recently revealed plans of opening up a R&D centre in Shanghai “to further its product innovation and development ambitions in China.”
The recent slide in the Diageo share price cannot be linked to this new development. But its shares have been falling since hitting an all-time high of 3,633p in mid-August. I think this market correction might be a great time to add Diageo shares to my portfolio.
The FTSE 100 company has been growing its brand portfolio to expand to Asia Pacific and Latin American markets. Sales in China grew 38% in 2021. Diageo also saw marked growth in markets like Kenya, India and Brazil. Globally, its organic net sales increased by 16% registering an operating profit of £3.7bn. My colleague Christopher Ruane wrote about Diageo’s 2% dividend yield and I agree that the company shows growth potential and offers steady income. A heady cocktail for an investor like me.
The export of alcohol is subject to restrictions and taxation. Diageo has been acquiring distilleries and popular brands in its target markets to offset this. In fact, it has grown its premium and budget alcohol brand portfolio in India and China. And, despite a string of recent purchases, the company managed to grow its free cash flow to £3bn (£1.4bn in 2020).
Although the global per capita alcohol consumption is declining, which is always a risk for the stock, I think Diageo is an excellent investment opportunity. I will be watching this FTSE 100 giant over the next few weeks to gauge its market performance before making an investment.