AppId is over the quota
AppId is over the quota
By Brian Gorman
LONDON | Tue Jan 17, 2012 11:38am GMT
LONDON (Reuters) - After sticking with cyclicals such as German carmaker BMW (BMWG.DE) during the autumn selloff, Barings fund manager James Buckley expects it and others exposed to global growth to benefit this year.
That trend should also see miners rise, while he will be hoping a similarly contrarian bet in the banking sector, with Bank of Ireland (BKIR.I), also pays off.
The Baring Europa Fund, which has $64.9 million (42.4 million pounds) under management, down from a peak of $750 million in 2007, is "mostly sold in areas like Asia and is a popular vehicle for risk-on investors," Buckley told Reuters in an interview
The fund lost 11.5 percent in the year to November, compared with a 1.5 percent decline for its benchmark, the MSCI Europe Index .MSCIEU.
Buckley's decision to stick with BMW and other cyclicals in the face of falling valuations was "not without risk, but it increasingly looks like being the correct view," he said.
The shares fell more than 40 percent from a 2011 high hit in July to a low in October, though they are now recovering.
"BMW is performing well after a torrid time in the summer months - it got sold off with concerns about the Chinese consumer," he said.
"It had some sales figures the other day that point to continued growth in 2012 in the emerging markets. It will also benefit from the weaker euro."
"It's better placed than the volume manufacturers, as it's selling into the affluent end of the market place, which in my view will continue to do well."
Buckley said he would continue to favour global-facing stocks "unless the valuation differential is screaming at you," as he says the global economy continues to grow while the euro zone remains in crisis. He cited better growth prospects in, for example, the United States, where non-farm payrolls grew sharply last month.
BANK OF IRELAND
He said some of his investments picks are driven by "special situations," such as Bank of Ireland (BKIR.I).
His stake in BOI is "non-consensual, much bigger than the benchmark," he said. "It will have a central position in the Irish banking sector going forward because its competitors are no longer operational. It is trading at 0.4 times book value and I don't see any capital issues.
"If you see an improvement in the Irish economy and a stabilising housing market, it's an obvious way to play that."
His stance on Bank of Ireland is in contrast to his views on the European banking sector as a whole, where he is underweight. He cites the recent problems of Italy's UniCredit (CRDI.MI), which had to offer a massive discount on a rights issue.
"What UniCredit points up is that any rights issue would be hugely dilutive to existing shareholders.
"I will be highly selective in avoiding those that need capital. If I was going into banks it would be in the names I already own like Barclays (BARC.L), BNP (BNPP.PA) and UBS (UBSN.VX), with fewer "capital issuance concerns".
Both banks and miners fell heavily in 2011. The STOXX Europe 600 Banks index .SX7P lost 32 percent, while the STOXX Europe 600 Basic Resources index .SXPP fell 30 percent.
Buckley sees more chance of a rebound for miners, on the prospects for global growth, with Xstrata (XTA.L), up 11.6 percent in the year to date, among his top 10 holdings.
"Miners were beaten up last year, but their balance sheets are stronger than banks." (Editing by Jon Loades-Carter)
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