Money managers that focus on non-U.S. investments are finding values even as the credit crunch roils markets worldwide.
Many managers still think emerging markets, in particular those in Asia, will continue to be attractive, although growth in that region most likely will not be as high as in the past few years.
We believe Asia is the place to be for the next 10 to 15 years, said Martin Schulz, managing director for international equity at Allegiant Asset Management Co., Cleveland. For the past few years growth in China has been around 10% to 11%, he said. Now, it may be 8% or 9%, even 7%, but still not negative.
Some names Mr. Schulz said he likes in the long term are Raffles Education Corp. Ltd., a Singapore-based private education company that owns and operates colleges and universities in the Asia-Pacific region; and Li & Fung Ltd., Hong Kong, a trading business that exports retail goods to companies such as Kohls Corp. and The Coca-Cola Co.
Allegiant manages $29.4 billion overall, with about $1 billion in international, of which about $300 million is in Asia.
Edwin Lugo, New York-based leader of Franklin Global Advisers non-U.S. small-cap and midcap growth equity team and lead portfolio manager for the $20 million Franklin International Small Cap Growth Fund, said he and other Franklin managers are watching Asia closely. Franklin managers are in the process of buying securities in the region, agreeing with Mr. Schulz that the long-term growth ability is still there for China, Mr. Lugo said.
One holding, Vitasoy International Holdings Ltd., Hong Kong, is doing well in the short term because it makes soy milk and a milk contamination scare is going on in the region, Mr. Lugo said. In the long term, the company makes a quality product and can expand into more regions in China.
Another area looking increasingly attractive is Japanese real estate companies, Mr. Lugo said. Most investors are staying away from real estate in the U.K. and the U.S. now, but Japan already has been through a recession. Even with the credit crunch, quality commercial properties are available at 30% to 50% discounts, he said.