situation in us to have knock-on effect and market recovery may take longer than expected
Heightened uncertainty following the terrorist attacks in the US has driven many Far Eastern fund managers towards aggressive growth opportunities in Hong Kong and China, while others have sought safety in cash.
The moves are the results of market uncertainty about whether an economic recovery has been delayed and perceived opportunities resulting from a slump in valuations.
The latest research by offshore fund research specialists Forsyth Partners shows most Far Eastern funds are heavily weighted towards Hong Kong/China.
Hugh Young, managing director of Aberdeen Asia, said: 'From the recent events in America, the portfolio has changed from defensive into aggressive stocks.'
He said: 'Since the event, Asian stock markets have dropped 10%. This has been far higher than markets in the US. Companies have come down which we previously thought were too expensive to buy.'
As a result of this slump, Aberdeen recently purchased China Mobile. The Aberdeen Global Asia Pacific Fund and the Aberdeen International Asia Pacific Fund each have a 2% weighting in their portfolio.
Robert Conlon, chief investment officer at Investec Asia, said: 'China Mobile is a company that is not affected by the US and is domestically oriented.'
China Mobile has a large weighting in the Investec GSF Asia New Economy Fund. However, Conlon has not purchased new stocks following the terrorist attack. Instead he has reverted to a 10% cash position.
Conlon said: 'The domestic telephone and mobile phone industry in the Far East is less sensitive to global trade. Before the World Trade Center attack we were seeing a recovery in the telecoms sector.
Intel and Nokia had announced an improvement in sales in July and August. But events in the US have raised the risk that recovery will not happen. However, if it shows the US consumer is relatively unaffected then we will put the cash back in.'
Conlon said the fourth quarter will be the most important for the technology sector as this is the season where a high number of computers are sold.
The Investec GSF Asia New Economy Fund is overweight Korea and Taiwan and underweight Indonesia, Philippines and Thailand. This is because Korea and Taiwan are significant electronic exporters.
Conlon said investing in technology has been very difficult and recommends telecom stocks over technology.
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