Britannic Asset Management has shifted the emphasis in its portfolios from defensive stocks to cycli...
Britannic Asset Management has shifted the emphasis in its portfolios from defensive stocks to cyclicals.
The switch has been made across all regions that the group operates in and is based upon the belief the global economy will pick up in the second half of 2002.
Andrea McNee, investment director in charge of Asia at Britannic, said: 'Defensives are looking very expensive at the moment. The aggressive monetary easing that we've seen since the World Trade Center attacks has made us feel more confident about the global economic outlook in 2002. The recession in the US is still likely to happen but we're more confident that the recovery will also occur.'
The region looking most attractive to the group is Asia, which Britannic is viewing as a value cyclical market. In its balanced funds, Asian weightings have been increased at the expense of the UK.
Although Asia as a whole has seen stock prices fall to near Asian crisis lows in recent times, a number of positives are in place for a recovery, Britannic believes.
McNee says: 'Asian interest rates are very low, as governments have taken a proactive approach to the global slowdown. A lot of companies have a current account surplus, having not gone on the investment binge that occupied Western companies in the late 1990s. As a whole Asian companies have been net savers, not spenders and are well positioned to expand when the market picks up.'
Consequently two-and-a-half times the region's market capitalisation is sitting in deposit accounts, when it could be invested. This together with attractive price to book ratios, good earnings yields and plenty of liquidity, makes a convincing case, she said.
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