Surge expected as investors turn east

As the UK stock market is buffeted around on the back of Wall Street, attention is turning to Japan where launches look much more attractive
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The Independent Online
AS THE mainstream UK market looks perilously close to its peak, many of the latest batch of investment trust launches are offering investors the chance to put their money into less expensive markets.

A new Japanese trust planned by Gartmore, an investment firm now owned by NatWest, aims to get in early on an expected surge in the Tokyo market. Other world markets are close to all-time highs, but Japan's stock market is more than 40 below its peak.

Gartmore Investment Trust Management marketing director Charlie Ricketts said a huge government investment plan, aimed at projects such as the rebuilding of Kobe after the recent earthquake, combined with historically low interest rates and a weak yen, should create afavourable business climate in Japan.

Mr Ricketts said: "Japan has suffered a deeper recession in recent years than many other countries. You've got the economy improving as the government has put the various measures into place, the corporate sector responding by actively investing and the consumer more confident because of the low interest environment. All that bodes well for the stock market."

The trust, due for launch after Easter, will follow the same investment strategy as the investment firm's Japanese unit trust fund, managed by Mark Fawcett, which has turned in a top 10 performance among its peer group over three, five and seven years. Mr Fawcett will also be looking after the investment trust. The new trust will aim for long-term growth, with an annual dividend of 1 per cent or less. Minimum investment is pounds 1,000.

Also in the Far East, Scottish investment firms Baillie Gifford and Murray Johnstone are issuing C (conversion) shares in their Pacific Horizon and Scottish Asian investment trusts.

Investment trusts issue C shares as a way of drip-feeding extra money gradually into an existing fund, so avoiding distortions that chunky new inflows can otherwise create. Scottish Asian's C shares, priced at 100p, will be converted into ordinary shares in the trust by 30 June, when C share holders will be given ordinary shares of equal value. Robert Coulter, of Murray Johnstone Investment Management, said: "This fund concentrates principally on the major markets in Asia. Once we have decided how much money we want to put in each country, we then focus on the larger capitalisation stocks in these countries, so it tends to be the blue chip stocks."

Application forms for the C share issue must reach Murray Johnstone by 26 March. Pacific Horizon's offer also closes on 26 March.

Fidelity is planning a new South East Asia investment trust, to be called Fidelity Asian Values. Due for launch in the new tax year it will cover Hong Kong, Thailand, Malaysia, Singapore, the Philippines, Indonesia, South Korea and India.

Meanwhile, Hill Samuel is looking closer to home with its UK Emerging Companies trust, its first investment trust launch. The company is hoping to attract up to pounds 35m, which will be invested in a portfolio of about 40 companies, most less than pounds 50m in size, which is small by investment standards.