Mark Hawtin, manager of the GAM Star Technology fund, has increased the fund’s exposure to Chinese internet companies, which he believes currently present more attractive valuations that their US counterparts.
“These companies are reaching an inflection point where they are beginning to monetise their products and solutions effectively. The new business models in the tech space operate in two stages: land grab, then monetisation. Investors often underestimate the value of the network effect for tech companies, as illustrated by the incredulous response to the price Facebook paid for Whatsapp. If a tech firm’s user base is reaching critical mass, they have great potential to start monetising that network.”
The health sector is an interesting place right now, in the view of JB Health Innovation fund manager Christophe Eggmann.
“The health sector is at the beginning of a new product cycle and companies’ product pipelines are currently extremely robust, creating particularly attractive opportunities for investors. Companies that bring innovation to market can expect high demand, immediate gains in market share and high pricing power.”
Can Elbi, manager of the JB Europe Focus fund, also makes a strong case for European equities.
“The economic recovery in Europe is slowly taking hold on sustainable factors such as a domestic demand pick-up in the core and an export renaissance in the periphery. European companies still generate 45 to 50% of their overall revenues domestically, and this makes us confident that the earnings cycle should also finally start to move upwards after two disappointing years. In our base case, we see 30 to 40% cumulative earnings growth for the SXXP [index] over the next three years.”
Emerging market equities, in particular Asia, receive positive backing from Enrico Camera, who runs the GAM Emerging Alpha fund.
“There has been a definite emergence of companies profiting from ‘higher needs’ in the emerging markets. Consumer discretionary rather than consumer staples are one of our primary investment areas as individuals look to illustrate their social status through their purchases. Great Wall Motor, China’s top SUV provider, is one such play. While general car sales are not demonstrating significant growth, the status now attached to owning an SUV in China has been a huge benefit to the company. The growing gaming industry in Macau can be accessed through companies like Galaxy Entertainment, enabling investors to benefit from significant increases in disposable income across the Asia region.”
