By Leo Bland Lloyd George Management's Far East ex Japan fund launched this week will have an initia...
By Leo Bland
Lloyd George Management's Far East ex Japan fund launched this week will have an initial bias towards Hong Kong, China, Korea and Taiwan.
The portfolio will also contain a high weighting towards technology stocks. As previously reported in Investment Week, the Oeic fund, LG Eastern Opportunities, is to be run by Adaline Ko.
Lloyd George Management previously ran the investment mandate for Henry Cooke's Solus Eastern Enterprise Oeic fund, also managed by Ko. That mandate switched to Lawrence Yip and Christopher Wong of ARN Investment Partners last year.
Ko's investment process begins with a top-down macro approach to provide country allocation before she moves on to stockpicking. She is intending to run a concentrated portfolio of around 30 to 35 stocks.
Ko said: "We are looking for growth companies and want to buy growth at a reasonable price. We tend to set a price target for stocks and review the stock when the target is reached.
"One market we still like is Hong Kong/China as we are seeing growth in China picking up. Its agreement to join the World Trade Organisation (WTO) will also help to make the country more competitive and encourage it to make an orderly transformation from a not very efficient, state-owned enterprise economy into a market economy. That is good for China in the long term but in the short term it may be a negative as some companies will face hardship with increased competition."
Hong Kong should also be a beneficiary of China's entry into the WTO, according to Ko. She predicted that multinationals would increasingly set up head offices in the former colony as the best route into China. At the same time she has predicted earnings growth of 15% to 16% for 2000 in Hong Kong as its economy accelerates.
She said: "We also like Taiwan, which underperformed in 1999 but I feel that it is one of the best marketplaces in the region. Growth is good, inflation is subdued and Taiwanese technology companies are world class. They are benefiting from the outsourcing trend from technology companies in the US and Japan.
"We also like Korea, which we will look to overweight. It saw 10% GDP growth last year and it will have average growth of around 4% to 5% for the next four to five years."
Ko is far less positive on the outlook for Singaporean stocks where the portfolio will have a neutral to underweight exposure.
She said: "It has done well but I wonder if we have got to a level where companies are reflecting their value. It is a safe place, but I am wondering if the outperformance of companies will come from Singapore. "
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