Although leading global fund managers say that Asian stock markets now look cheap compared to the rest of the world, they are still refusing to buy in according to an FT Adviser article. Fidelity’s Jeremy Podger, who has just 2% of his nearly £1.5bn Global Special Situations fund in Asia Pacific ex Japan, was quoted as saying:
“In the developed world you have seen the return on capital forever expanding, but in China and other capital-intensive markets lots of capital has been sucked in and returns have been grinding down… That’s why when you look at the pattern of forecast returns for the region you have net downgrades. The Asia trend is very negative.”
Max King, a global multi-asset fund manager at Investec Asset Management, was later quoted as saying:
“What makes it cheap is a lot of low-quality companies on low valuations. Chinese banks have got severe problems, for instance. There are one or two companies I would own but I still want to stay clear of some.”
King also said that he was the most skeptical about China, which had the “wrong generation” within corporate management:
“In 20 years it may well be fine but the people now are the ones who have come through the bureaucracy of China and got rich quickly.”
To read the whole article, Fund managers wary of ‘cheap’ Asian stockmarkets, go to the website of FT Adviser.
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