Crash turns up bargains

The slide on world stock markets may leave rich pickings for investors

Investors prepared to take a risk on companies exposed to Asia's current economic turmoil may find some rich pickings after the month-long slide in global stock markets.

Top of some fund managers' list are shares in Rio Tinto, the world's largest mining company, which have dropped 22 per cent this month. Bank shares are also thought to offer good value.

"We wouldn't go too far into economically sensitive stocks, but we regard Rio Tinto as an exception. Unless you believe that there's going to be a global meltdown, we think you should be buying," said Nigel Cobby, director at Morgan Stanley Dean Witter.

Stock markets around the world plunged this month because of currency problems in Asia, clobbering companies that make a lot of their profits abroad. The Hang Seng Index in Hong Kong is down 26 per cent with other Asian markets matching its losses. The US Dow Jones Index is down about 6 per cent during the past 30 days, while the FT-SE 100 Index has lost about 4.5 per cent.

Rio Tinto, which has about 40 per cent of its sales in Asia, was the second-biggest faller last week on the FT-SE 100. Only EMI Group, the music company, saw bigger losses.

Some investors think the company, which operates on every continent, is in a strong position to cope with any slackening in demand from Asia caused by the recent financial crisis.

"Rio Tinto keeps it simple and goes for the lowest cost and biggest assets," said Graham French, at M&G Investment Management. "You can buy it and just not worry about it. You know it will remain the number one mining company in the world."

"I bought some Rio shares this week because I thought they were very oversold," said Job Curtis, at Henderson Investors. "It's a very well managed company."

Most analysts think there will be further falls at HSBC Holding, Britain's largest bank and the parent of HongKong Bank. Even so, other banking stocks may have dropped too far given the expectations of further mergers and acquisitions, and soaring bond prices.

"Clearly banks look oversold," said Tony Hardy, an investment manager at the Church Commissioners. "That's the problem with major stocks - they tend to get more seriously hit than they should."

Mr Hardy said he has been buying bank stocks this week.

There was talk that Standard Chartered, one of the stocks to take a pounding this week because of its extensive interests in Asia, could rise on bid speculation. The bank has seen its share price decline by about 35 per cent during the last three months, leaving it more vulnerable to a predator.

Financial institutions may also benefit from the rise in bond prices, which increase the value of banks' large investment portfolios. Bonds rose as investors fled stock markets, with the yield on the benchmark 10-year UK bond falling to 6.56 per cent on Friday from 7.02 per cent on 1 September.

Buying bank shares is not for the faint-hearted. Some analysts think banks' possible losses on the currency and stock markets make their shares hazardous. "We would be most nervous about financials. Who knows what risks they have," said Mr Cobby.

Domestic companies are usually the favourite bet in times of stock market turmoil.

Copyright: IOS & Bloomberg

PROMOTED VIDEO
Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
theatre
Sport
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
News
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
tv
News
i100
Travel
travelGallery And yes, it is indoors
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
John Terry, Frank Lampard
footballChelsea captain sends signed shirt to fan whose mum had died
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world