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Chinese banks top income play for Reyl's EM equity trio

Chinese banks top income play for Reyl's EM equity trio

Reyl Asset Management’s star emerging market managers have turned their attentions to dividend-paying Asian financials stocks with particular emphasis on China and Thailand.

Speaking to Citywire Global, Euro Stars A-rated manager Emmanuel Hauptmann, who co-runs the Reyl (Lux) GF-Emerging Equities fund with Thomas De Saint-Seine and Maxime Botti, said they had added to positions since the beginning of the year.

Hauptmann said: ‘Due to attractive prices we have added to our holdings particularly in the financials sector where we have seen opportunity. This is most prominent in the dividend aspect of our three engine strategy, where we have attractive dividend names particularly among Chinese banks.’

Among the major changes, Hauptmann – who co-runs the fund with Thomas de Saint-Seine and Maxime Botti – said they have increased their position in China Construction Bank, which he said is now the largest single position in the fund.

Hauptmann had suggested the team was becoming more constructive on China towards the end of 2012 and had made tentative moves to reduce the then 13 percentage point underweight.

According to the latest available factsheet, China makes up 7.2% of the geographic exposure. This compares to a 4% position at the end of September 2012.

Thailand

Elsewhere in the portfolio, Hauptmann said they have also increased their weighting in Thailand. It now represents 9.4% of the fund’s country allocation, with an increase of two percentage points since the start of the year.

‘We saw opportunity there mainly in the financial stocks where there are also plenty of opportunities among dividend names,’ said Hauptmann.

This makes Thailand one of the most pronounced country overweights in the fund, with 7.8 percentage points more than its Citywire benchmark, the MSCI EM (Emerging Markets) TR USD, allocated here.

On a sector basis, financials as a whole comprise a major part of the fund’s allocation, accounting for 29.2% of investments at the end of January 2013. This compares to the benchmark allocation of 27.3%.

The fund, which has recently surpassed $1 billion in assets under management, has returned 59.71% in the three years to the end of January 2013. This compares to its benchmark index, which rose 24.22% over this period.


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