JF Asset Management Believes Equities Will Continue to Outperform

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Aug 09, 2007

Hong Kong, 9 August 2007: JF Asset Management (JFAM) believes that global equities will continue to outperform both bonds and cash on a 12-month view. Whilst there may be another correction, any weakness would be seen as a mid-cycle pullback, rather than the start of something more worrisome. Indeed, it may offer an opportunity to add to equity positions. For this reason JFAM thinks that investors may enhance their investment returns by adding exposure to Asia in their portfolios.

Speaking at JFAM’s “Capitalise on Asia’s Unstoppable Growth” conference today, Mr Emerson Yip, an Investment Manager with JF’s Greater China Team commented, “Overall prospects for the Greater China region look remarkably favourable from a variety of perspectives, ranging from traditional fundamental valuations as well as monumental policy changes. China, the mainstay of the Greater China region will remain one of the strongest growth sources for the region and the global economy. We see the further liberalisation of the QDII policy as a trigger for further momentum for Hong Kong stocks over the medium term. Meanwhile, in Taiwan, there are many reasons to be positive in 2H07, not least of which is huge underperformance in the past few years resulting in attractive valuations - Taiwan has one of the strongest Earnings Per Share (EPS) growth forecasts while possessing the lowest Price-Earnings Ratio multiple after Korea, even after adjusting for bonus share dilution.”

Mr Joshua Tay, an Investment Manager with the firm’s Pacific Regional Group added, “Asia is growing faster than the rest of the world, which opens up a window of opportunity for astute investors. We believe that changing values and changing times will translate into private and public consumption becoming a more significant contributor to Asian GDP growth than in the past. Factors driving this growth include favourable demographics, rising incomes and savings, the need to improve living quality, the migration from rural to urban areas and the higher aspirations generally of the typical Asian consumer. As a result, EPS growth in consumer related sectors such as autos, banks, retailers, durables, food and insurance are looking favourable.”

Given that risks are rising as the business cycle matures, JFAM continues to favour large cap stocks, where valuations look most attractive, and where strong cash flows, share buy-backs, and higher dividend cover all favour better shareholder returns. JFAM thinks that growth stocks, which have outperformed value stocks so far this year, should continue to do well, as investors’ current focus on earnings leads to higher prices being paid for stocks displaying higher growth trends.

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For further information please contact
Daniel Chui, Head of Investor Communications
Telephone: (852) 2800 2874 / (852) 9191 6789
Email: daniel.wc.chui@jfam.com
Issued by JF Asset Management Limited

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Notes to Editors
JF Asset Management (“JFAM”) forms a key part of JPMorgan Asset Management Holdings Inc. and is the descriptive name used for our asset management businesses in Asia ex-Japan. The brand name “JPMorgan Asset Management” covers the asset management activities of JPMorgan Chase & Co. globally.

JPMorgan Asset Management is part of J.P. Morgan Chase & Co. and is a global asset management leader providing world-class investment solutions to clients. With US$1.1 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 30 June 2007) and offices in 40 locations around the world, JPMorgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

Commitment to Hong Kong
JFAM’s fund management business has remained headquartered in Hong Kong throughout the past three decades and today has more than 450 employees based in this location. Since its formation, JFAM has established itself as one of the largest local portfolio managers in Hong Kong with over US$36 billion (30 June 2007) of funds managed locally.

As part of a major global investment group, we are committed to providing specialist teams with the resources needed to deliver successful products and performance to our clients. The Hong Kong-based Pacific Regional Group, together with the local presence of the Global Portfolios Group, forms the core of JFAM’s investment management operations. In addition to the knowledge and experience of our individual investment professionals, the stability of the team has enabled JFAM to develop strong relationships with local clients.