VIEW-Commodity blue chip stocks attractive
LONDON (Reuters) - Commodity-related blue chip stocks in Asia are attractive as big companies with a decent cash balance can wipe out competitors and survive the current market turmoil, Nomura Asset Management said on Wednesday.
Vipul Mehta, senior portfolio manager at the Japanese firm, said India and China will still lead Asia's economic growth, underpinning demand for commodities.
"It's been an extremely tough year and Asian markets have borne the brunt of the turmoil. But it's not all doom and gloom. Asian growth... will be led by India and China," Mehta told a briefing hosted by Witan Pacific Investment Trust, which allocates half of its portfolio to Nomura.
"We have a blue chip bias. Companies with a big cash balance and low leverage are going to be survivors of this crisis... Demand for commodities will continue especially bulk commodities such as iron ore and coal."
Nomura likes firms such as BHP Billiton (BHP.AX) (BLT.L), Rio Tinto (RIO.AX) (RIO.L) and Samsung Electronics (028050.KS).
"(BHP and Rio) are in a position to wipe out small players," Mehta said.
"Competitors find it hard to survive in this market but Samsung is able to increase market share."
Nomura is also overweight on China Mobile (0941.HK) and Housing Development Finance (HDFC.BO) of India, which are also among the blue chip stocks seen riding out market volatility.
Nomura currently has a cash position of around 4-5 percent, compared with 1-2 percent held in normal times.
"The market is pricing in depression so we deploy a bit of cash in our portfolio," Mehta said.
Asked about the victory of Democrat Barack Obama in the U.S. presidential election and its impact on financial markets, Mehta said the outcome did not change the dire reality of the U.S. economy.
"We still have bad news coming out of the U.S...Value correction might be behind us but it will take time for job losses and (the impact on) balance sheets will materialise, probably for 9-12 months," he said.
Witan allocates its 108 million pounds of its portfolio to Nomura and Aberdeen Asset Management and aims to outperform the MSCI All Asia Pacific Free Index .dMIAP00000P.
- Tweet this
- Share this
- Digg this