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JPM's EM equity head turns bullish on 'cheap' Korea

JPM's EM equity head turns bullish on 'cheap' Korea

Korea is presenting an ‘unusual’ and attractive opportunity for investors, according to JPM’s emerging markets head Richard Titherington.

Titherington, who runs the US$2.5 billion JPM Emerging Markets Opportunities fund, said there are a confluence of factors drawing him towards Korea.

‘I think there’s an unusual opportunity here,’ he said. ‘I think Korea is a cheap market.’

He acknowledged two headwinds facing Korea in the form of a weakening yen against the won and slowing smart phone sales, but Titherington dismissed these concerns.

He said: ‘I think both those issues are cyclical rather than structural, so that presents a medium-term buying opportunity.’

Titherington has reflected this bullish stance on Korea with a large position in Samsung Electronics, which makes up 6.3% of the fund.

Taper tactics

Mindful of the impact of tapering and a strong US dollar on the emerging markets, Titherington said currency risk remains a major concern for developing world investors.

‘Your biggest risk in investing in EM is currency risk, so for a stable and rising dividend stream over time, you want to be diversified by country, industry and currency.’

In Titherington’s income-focused strategy, the JPM Emerging Markets Dividend fund, he is more bullish on telecoms, which he views as potentially providing strong returns in the coming year.

‘From a sector standpoint, we’re pretty excited about telecoms. We think telecom providers are going to benefit from increasing data usage across a broad range of emerging markets.’

‘You see it in markets across Southeast Asia, Korea, Russia and Brazil. It’s a pretty broad phenomena,’ noted Titherington.

The JPM Emerging Markets Opportunities A Acc USD fund returned 7.1% over the three years to the end of November 2013. This compares to a rise of 3.13% by its Citywire benchmark, the MSCI EM (Emerging Markets) TR USD, over the same period.

Meanwhile, the JPM Emerging Markets Dividend has returned 7.9% over the three months to the end of November 2013. This compares to a rise of 10.1% by its Citywire benchmark, the MSCI EM (Emerging Markets) TR USD.



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