67 WALL STREET, New York - June 28, 2013 - The Wall Street Transcript has just published its Investing in Asia Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Investing in Asia - Longer-Term Investing - Asia Pacific Investment Theses - Investing in China - Equity Investing Strategies - China's Domestic Markets - Undervalued Asian Companies
Companies include: IGB Corporation Berhad (IGB:MK); Shenzhen International Holdings Limited (0152.HK), Mitra Adiperkasa Tbk. (MAPI.JK) and many more.
In the following excerpt from the Investing in Asia Report, an expert portfolio manager discusses his portfolio-construction methodology and investment philosophy:
TWST: You already said that you use a bottom-up process, but that being said, which sectors are you most interested in at the moment and why?
Mr. Wong: Based on our company research and the valuation work we do, we are currently bearish on two sectors. One would be the consumer staple sector, especially the Chinese food and beverage sector. They are way overvalued. For a long time, investors have liked this sector for their defensive nature. We concur on this point, but the stocks are priced for perfection. What worries us most is the slowdown we are seeing in both the top line and bottom line of many F&B companies. I have not even started talking about the intensifying competition that we are seeing. I expect F&B stocks to underperform for an extended period of time.
The second sector that we are bearish is the REITs, or the real estate investment trusts, in the region. Because of low interest rates, most investors, including retail investors, have felt for a long time that REITS are low-risk and attractive investments yielding 6% to 8%. What they are not aware of is that the underlying asset values can decline when the overpriced property market corrects one day. Worse still, if interest rates rise, which they must one day from artificially depressed levels, it would not be difficult to imagine REITs crashing. There was already a mild correction in recent weeks.
Presently, we see value in industrial stocks, partly because this sector had been out of favor for the last three years. We also like the fact that this is a contrarian bet, which usually implies depressed valuations. Another counterintuitive bet is the consumer discretionary sector. The timing would seem all wrong at first glance, but the depressed valuation and the possibility of an earnings recovery make some of these attractive. By and large, we are bearish on the property sector, but have selectively picked some that are selling at deep discounts to their underlying asset values. This is a pure bottom-up decision...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
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