Aberdeen finds good value in RI firms<\/p>\n
SINGAPORE (Dow Jones): It might seem a bit contradictory that
\na fund management firm executives describe as a "conservative
\nsort of Scottish house" is invested in Indonesia, one of Asia's
\nmost volatile markets.<\/p>\n
But Aberdeen Asset Management Asia Ltd. sees no contradiction,
\nas long as it sticks with its long-standing practice of investing
\nonly in companies it knows well.<\/p>\n
In Indonesia, "scratch beneath the surface and you find lots
\nof very well-run companies," said Peter Hames, a director for
\nAberdeen in Asia.<\/p>\n
And Aberdeen tries hard to scratch beneath the surface
\nwherever it invests. The firm doesn't invest in a company until
\nit has met with management several times and is convinced the
\ncompany is well run and highly transparent, Hames said recently
\nin Aberdeen's Singapore office. The firm typically expects to
\nhold shares five years.<\/p>\n
In Indonesia, Aberdeen finds good value in companies such as
\nPT Unilever Indonesia and other locally listed units of
\nmultinational corporations.<\/p>\n
Aberdeen, based in Scotland, applies its investment philosophy
\nthroughout Asia. In fact, it still holds most of the same stocks
\nit held before the Asian economic crisis hit in 1997, Hames said.
\nAsia makes up about 8 percent of Aberdeen's global assets of
\nabout S$45 billion (US$26.4 million).<\/p>\n
"Although prices fell, we felt quite comfortable" that
\ninvestors would return to the region, he said.<\/p>\n
"We're still fairly comfortable with the markets," although
\nsome sectors are "quite frothy," Hames said.<\/p>\n
The technology sector, for instance. Although Aberdeen has
\ntechnology holdings, it has avoided the more speculative
\nnewcomers with no earnings and mountainous valuations.<\/p>\n
The firm also passes on companies that have relied on
\ngovernment favoritism. "We don't buy politically connected
\nstocks," which keeps Aberdeen out of many big companies in
\ncountries such as Malaysia and Indonesia.<\/p>\n
Its holdings are widely spread around the region and among
\nsectors, without adhering to any benchmark weightings, he said.
\nAberdeen particularly seeks midsized companies and "the old-
\neconomy stocks that have been sold down."<\/p>\n
Aberdeen's preference for stock picking, instead of relying on
\nbenchmarks, means its funds can underperform in bull markets. Its
\nIndonesia Equity Fund has returned 60 percent in the year to Feb.
\n4, according to Standard & Poor's Fund Services, while Jakarta's
\nJSX Composite Index is up 88 percent.<\/p>\n
"A lot of the companies are in the index that we just wouldn't
\ntouch," Hames said, such as financial stocks and government-
\nconnected conglomerates.<\/p>\n
While the firm holds many high-flying technology shares, it
\ndoesn't put big bets on them, preferring a diverse portfolio,
\nHames said.<\/p>\n
Among its top holdings in Asia are Hong Kong's Giordano
\nInternational Ltd., B.A.T Indonesia, and Robinson & Co. in
\nSingapore.<\/p>\n
While Aberdeen relies heavily on the larger, steadier markets
\nof the region, it isn't afraid to be adventurous. Sri Lanka is
\n"probably the cheapest market in Asia" and Aberdeen is investing
\nthere, though modestly, he said.<\/p>\n
Aberdeen is more wary of Hong Kong, where the firm sold down
\nits holdings in the city's big property giants before the crisis.
\n"It seemed illogical" to hold pricey property stocks at the
\nexpense of fast-growing technology shares and other companies
\nelsewhere in the region, Hames said.<\/p>\n
Aberdeen sees hazards in Asia. A slowdown in Japan or the U.S.
\ncould slow regional growth, he said. The slow restructuring
\nprocess also is a problem.<\/p>\n
"What worries me as an investor is the possibility of
\nbacktracking on reforms" prompted by the 1997 crisis, Hames said.
\nIf the regional recovery lulls governments and businesses into
\nabandoning reforms, then flaws may worsen, he said.<\/p>",
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"sponsor": "Okusi Associates",
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