The free fall by many Asian markets in late 1994 represents a tremendous buying opportunity for investors, according to Carol Chuang, portfolio manager of the Matthews Pacific Tiger fund, a mutual fund investing in Asian markets excluding Japan.
The fund, which had the bad fortune to have begun operations Sept. 12, saw all but one of the eight Tiger countries in which it invests drop significantly in the period ended Dec. 14. Five markets had double-digit losses, led by Malaysia at -23% and Hong Kong at -22%. Only the South Korean market gained, with a 5% return.
"Despite major declines in almost all these markets, the fundamentals have remained relatively unchanged. The effect on these markets has been more psychological than real; for example, much of the drawdown has been due to rising interest rates. Even if interest rates go up another 100 to 200 basis points, it's not going to stop the growth of these economies," she said.
Ms. Chuang had 30% cash in mid-December and plans to reduce that position to 5% by the end of the first quarter.
Among her favorite stocks are: Jardine Strategic Holdings, a conglomerate she says represents a microcosm of the Hong Kong market; Land & House, a Thai property developer; Kepco, South Korea's electric monopoly; and Indonesia's Lippo Bank.