SINGAPORE
(Reuters) - JPMorgan Asset Management
has cut its investments in commodity companies as it turns more risk averse due
to slowing economic growth in China and India and the debt crisis in the euro
zone.
"If
you compare to say three, four, five months ago, one of the bigger changes that
we've done is that we have reduced commodity exposure quite a bit," said
fund manager Pauline Ng, who helps manage JPMorgan's nearly $3.5 billion
invested in ASEAN equities, along with three other portfolio managers.
"We
used to be a big believer of the petrochemical and the coal story, today we are
less positive on the outlook for those sectors. So, we have shifted to an
underweight position for those global cyclical companies," Singapore-based
Ng said.
The
ASEAN fund moved to a more underweight position on Indonesian banks, partly due
to regulatory risks, and shifted some of the money to Thailand, on which it has
had a positive bias for many years.
DBS
Group Holdings Ltd (SES:D05.SI - News), which bid $7.3 billion for Bank Danamon
Indonesia Tbk PT (JKT:BDMN.JK - News), is among the top-10 holdings in the
fund.
Indonesia's
central bank is set to limit the maximum stake a single shareholder can take in
the country's banks to below 50 percent, a move that could scupper DBS Group's
bid for Bank Danamon.
"I
think at this point in time, the information available is pointing to the fact
that it's probably not easy to see the deal take shape in the form that it was
first envisaged," Ng said.
The
Association of South East Asian Nations, or ASEAN, includes Singapore,
Malaysia, Thailand, Indonesia, Philippines, Vietnam, Brunei, Cambodia, Laos and
Myanmar.
COCKTAIL OF RISKS
In the
Singapore country fund, JPMorgan favors utilities, telecom and real estate
investment trusts due to their defensive qualities that could help investors
ride uncertain markets.
Keppel
Corp Ltd (SES:BN4.SI - News), Astra International Tbk PT (JKT:ASII.JK - News)
and United Overseas Bank Ltd (SES:U11.SI - News) are among the top holdings of
the ASEAN fund.
Ng is
cautious on the outlook for global markets, given the cocktail of risks in
Europe, China and India.
China
posted its weakest growth in nearly three years in the first quarter.
"Somebody
gave us this analogy - the first time you do skydiving or bungee jumping, it's
a bit scary but not so bad. The second time it's a lot worse because you can
remember the feeling of it. I think we are a little bit going through that
right now," Ng said, comparing today's markets with the situation during
the 2008 financial crisis.
But the
fund remains very positive on the outlook of Southeast Asia due to the region's
growth potential.
"Every
part of the world you are seeing a slowdown in growth. I think in Southeast
Asia, what is unique is that we believe that the growth will be sustainable and
with the potential to increase if the governments can execute the investment
programs that they talked about," Ng said.
Eveline
Danubrata and Anshuman Daga
(Editing
by Muralikumar Anantharaman)
Reuters
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