Oil price volatility and perceived risks in Russia have seen the Jupiter Emerging European Opportuni...
Oil price volatility and perceived risks in Russia have seen the Jupiter Emerging European Opportunities fund significantly reduce its exposure to the country in the past four months.
Elena Shafton, manager of the £14.5m fund which launched last September, originally planned to hold 47% in Russia but has now reduced that to 39%. In its place, she has increased her weighting in Poland from 8% to 21%.
She said: 'Oil companies are now on a P/E of four to five times, are growing by 10% a year on average and pay dividend yields of 3%-4%. This is an attractive combination of growth and value and, at some stage, I will increase the weighting, but the companies will continue to be volatile along with the movement in oil prices.'
While Shafton was cautious about the economic environment of Poland last September, the economic data flow of the past couple of months gives her reason to believe the economy is recovering.
According to Jupiter, Polish retail sales are growing 5% a month and exports grew by 9.5% for 2002, with strong demand coming from Europe.
Shafton said: 'From company meetings I had in Poland there was an indication that corporate management is cautiously optimistic for the prospects for the year. The recent economic slowdown in Poland separated the winners and the losers. As a result, my exposure to the region is very selective.'
A company Shafton particularly likes is IT business Prokom, which, she said, emerged as a winner when it maintained margins of 17.5%, compared with its nearest competitor, which had margins of 4.5%. In terms of sectors, Shafton has increased her exposure to telecoms since launch, going from 12% to 27% of the portfolio.
She has also upped her exposure to Russian fixed-line telecoms because of consolidation in the sector. The resultant restructuring has meant more companies are emerging that are reasonably liquid and growing earnings by 30%-50% on P/Es of four to five times. The portfolio has also increased telecoms exposure across central Europe.
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