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printJan 15, 2008
Speaking at JF Asset Management's The Essence of Spice conference today, Mr David Shairp, Global Market Strategist of JPMorgan Asset Management was keen to make it clear to the audience that, as markets were likely to be volatile in the weeks ahead, investors should err on the side of caution.
Hong Kong, 15 January 2008: Speaking at JF Asset Management's (JFAM’s) “The Essence of Spice” conference today, Mr David Shairp, Global Market Strategist of JPMorgan Asset Management was keen to make it clear to the audience that, as markets were likely to be volatile in the weeks ahead, investors should err on the side of caution. “We expect volatility to increase or stay high for most assets in coming months, with sharp sector rotation / asset allocation shifts a key feature of markets. International investors will need to be quite nimble, as we see a good chance that the early part of 2008 will have its share of 'ups and downs'." Mr Shairp also believes, however, that 2007’s heritage of unanswered issues should become clearer as 2008 progresses, dispelling some of the uncertainty currently holding markets back. The patient investor may still benefit from a decent rally in global stock markets later in the year. For this reason JFAM recommends that though investors may wish to respond to the global macro concerns by taking a more cautious short-term stance, they should be prepared to stay the course with their equity investments in 2008, as on a twelve month view this remains our preferred asset class.
Mr Shairp added, "Within equities our preferred markets are Europe, Asia Pacific ex-Japan and the US (large cap only). For as long as risk perceptions remain elevated, we would stay underweight small caps and prefer growth over value, with a bias towards companies with high quality earnings and strong cash-flow generation. As all regions are likely to participate in a 'relief rally' when it comes, good stock selection will be the key to outperformance in 2008."
Mr Motoji Fukuyama, Portfolio Manager, shared the same thoughts and added, “We approach 2008 with cautious optimism, and believe that once the uncertainties surrounding US and global growth, and the international credit crunch become more transparent, then we expect Asian stock markets to pick up again for a sixth straight year of positive returns. Given their strong domestic growth drivers and robust corporate earnings, China and India should remain insulated from the worst of the US problems. Furthermore, global interest rate cuts could provide fuel for regional equity markets despite the current uncertainties.”
To comment on the global emerging markets outlook for 2008, Mr Christopher Morrell, Portfolio Manager, said “In the past, tightening credit markets usually worked against high risk assets. However, the resilience of the emerging markets, as evidenced by their strong performance in recent months, indicates that investors paid more attention to the strong underlying fundamentals of the emerging markets world rather than to events in the financial markets and worries of a downturn in US demand. This also suggests that global emerging markets should no longer be seen as a leveraged play on developed world growth, but as an asset class increasingly leveraged to its own domestic demand story.”
In JFAM's view, significant Asian and global emerging market equity exposure in portfolios in 2008, is where the potential for higher overall returns continues to reside. As always, mutual funds offer the best and simplest tool for investors who wish to reshape their portfolios, especially in a challenging investment environment like the present.
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For further information please contact
Daniel Chui, Head of Investor Communications
Telephone: (852) 2800 2874
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$1.2 trillion in assets under management (the Asset Management client funds of JPMorgan Chase & Co. as at 30 September 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$44 billion (30 September 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.