Money: Fund managers flock back to the Far East
Sunday 07 November 1999
Emerging markets in the region are suddenly back in fashion. Fund managers have been buying up shares in businesses based within the Tiger economies. "The Far East is our favourite region at the moment and there are a lot of opportunities there," says David Rough, group investments director at Legal & General.
Japanese funds are expected to be among the biggest winners. Fund managers say the policies of the central bank, the good business infrastructure and a cheap workforce promise impressive returns.
Many Asian countries are starting to adopt Western-style shareholder values for the first time. This should have the knock-on effect of supporting fledgling markets and furthering business growth. Mr Rough says: "Companies in the Far East needed to restructure to survive, and they are far leaner today. The scene will unfold dramatically in earnings growth."
The unusual combination of low price/earnings ratios and above-average earnings growth in the Far East has created a promising environment. "Inves- tors would be silly to keep this region out of their portfolio but I wouldn't go over the top. An exposure of 5 to 10 per cent of your total portfolio would be ideal," says Mark Dampier at Hargreaves Lansdown, the asset management company.
Not everyone is so confident. Risks for potential investors in the Far East include a slowdown in the American economy. Asian countries have relied on the US boom to keep them going through the recession.
TOP FOUR EMERGING MARKET FUNDS
Templeton Emerging Markets Fund - investment trust
Invests in Hong Kong (19.9 per cent), South Korea (19.3 per cent), Singapore (13.6 per cent), the Philippines (12.2 per cent). Exposure to electronics and banking. Tel 0800 305306.
Schroder Pacific Growth Fund - unit and investment trust
Invests in Hong Kong (31.7 per cent), South Korea (19.3 per cent), Taiwan (16.6 per cent), Singapore (14.7 per cent). Exposure to electronics, banks, telecoms. Tel: 0800 526535.
Fidelity Asian Values - investment trust
Invests in Hong Kong (25.3 per cent), Taiwan (18.8 per cent), South Korea (15.4 per cent) and Singapore (10.7 per cent). Bias towards larger companies. Tel 0800 414171.
Govett Pacific Strategy Fund - unit trust
Invests in Japan (30 per cent), Hong Kong (16 per cent), South Korea and Singapore (9 per cent), Taiwan (7 per cent). Exposure to any company showing strong growth prospects. Tel 0845 300 9090.
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