Christopher Pease, of Sarasin, outlined three investment themes. The first one is corporate restruct...
Christopher Pease, of Sarasin, outlined three investment themes. The first one is corporate restructuring. "There is a lot of M&A activity going on at the moment and that is also very much part and parcel of the restructuring. In fact, this year for the first time M&A activity in Europe is actually higher than it is in the US which is quite a turnaround," said Pease. He added: "The typical US citizen at the moment apparently looks at 1,500 advertisements a day from the time he gets up in the morning to the time he goes to bed, so it is far harder for advertisers to acquire new customers through advertising. Corporations are increasingly using M&A activity as a way of acquiring new customers."
In addition, the restructuring seen in Europe is moving across the globe. Pease gave the particular example of Asia, China and Japan. "Interestingly, in Japan some areas are more able to restructure than others. The retailer, for example, is still rather slow in this respect, whereas the area of electrical machinery is rather faster and it is interesting that this is where the performance has been."
The trend in investing in stocks and mutual funds which started in the US is now coming over to Europe. The equity culture in Europe is growing very fast, said Pease. "In Germany we expect the amount of money invested in equities to at least double over the next 10 years. It doesn't really matter which country you look at, whether it is Italy, France, the UK or Germany. Investment in equities is growing in all these areas. Japan is rather behind in this regard, but still offers exciting possibilities."
Pease said Sarasin divided consumers into three areas: the affluent consumer, the investor consumer and the responsible consumer.
Energy demand was the third theme. Pease explained it was one of the attractions of the multi-thematic approach to be able to include oil and technology and restructuring all within the same fund, thereby giving the diversification that most investors are looking for. "It is quite interesting to see that the real price of oil has actually remained fairly stable for the last 15 years, apart from the spike from the Gulf War. In real terms the oil price isn't that high, but we are quite excited by the possibility of making a fair amount of money out of this area. We think that shares like Shell and BP are still really quite cheap in spite of them having gone up a fair bit in the last nine months or so. Inventories are low and production growth is fairly limited. Demand for oil has increased fairly consistently apart from a slight dip in 1998 but, generally speaking, the swing demand players are the Far Eastern countries and if their economies remain relatively buoyant, there will be a satisfactory demand picture for oil."
It leads to a very bullish scenario, in Sarasin's view, for investment in energy .
On technology, Pease talked of two themes. The first was based around the Internet and the way that the Internet is moving from being dominated in America to now being a major part of life in Europe and the Far East. The second was Bluetooth technology. "Bluetooth is a chip developed by Ericsson and then licensed out to over 2,000 other users. It will mean that upon arriving at your home your door could automatically open and lock for you. The entry lights come on, the heat adjusted to your pre-set preferences. What Bluetooth will do, will enable consumer products to basically talk to each other without the need for wires linking them together. The major Bluetooth penetration will be in areas such as PDAs, printers, desk top digital boxes and mobile phones."
Pease added: "What is quite interesting is that the producers for these consumer products are essentially in the Far East and it is that area that is going to benefit most, we feel, from the Bluetooth upgrade cycle."
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