Executives from
JP Morgan (JPM) and
American Century Investments (ACI) dined with the media today. Officially entitled the
1999 Global Investment Forum, the lunch and accompanying seminar was a chance for the press, including reporters from the
Wall Street Journal, New York Times, and
Business Week to meet the firm's investment pros, including
Chris Durbin, JPM's chief investment strategist.
JPM investment pros -- Durbin,
Paul Quinsee , JPM portfolio manager and chairman of international equity strategy group, and
Henrik Strabo, ACI's chief investment officer/international -- hammered one investment theme especially hard: Global growth is gaining momentum -- the best returns will be in countries and sectors where growth is a surprise, and that the US market, with its extreme valuations and higher P/E ratios is much less attractive.
Durbin touched on the opportunities in Japan, and his firm belief that the economically beleaguered country is finally taking the steps necessary in order to move it down the road to recovery.
Quinsee agreed and stressed the more reasonable valuations of Japanese stocks of late. The fact that Japanese equities have come back to the pack now allows his fund, the
JP Morgan International Opportunities Fund, the opportunity to invest in larger, well-known companies, like
Fujitsu, which until recently had much less attractive P/E ratios and price/reported book ratios. He did, however, mention that it's often necessary to be skeptical about earnings in Japan, as accounting irregularities often exist.
"We're seeing the beginning of a long and painful restructuring of the Japanese corporate sector," said Quinsee, "but slowly we're starting to see some profits and higher earnings."
"Really" restructuring is important to Quinsee, and he's starting to see a few companies commit to a large-scale overhaul of corporate practices, including
Mitsubishi Chemical and
NYK Shipping.
Quinsee also sees opportunities in emerging markets, especially in cyclical stocks, which are deeply undervalued. "It would be wrong to overlook the emerging markets -- there are clear signs that they are about to improve," he said.
Strabo also sees strong opportunities in the European markets, mostly due to continued privatization, deregulation and consolidation. He also sees the reductions in social programs increasing the need for individuals to save for their own retirement, creating a boom for the financial services industry.
"The emphasis on creating shareholder value is nothing less than a transformation of basic European business practice," said Strabo, adding that the trends toward fewer classes of stock and management compensation tied to performance were helping drive this change.
The key takeaways from the forum?
All of the speakers expressed the same basic forecast for global growth -- it's gaining momentum, which will mean more opportunities in several international markets.
Japan still has a long way to go, but JPM and ACI seem to feel it has started on the right road, and the recession has fleshed out some bargains.
And asset allocation-wise -- underweight
significantly in U.S. equities, slightly in U.S. and International bonds, and
overweight in emerging markets, MSCI EAFE, emerging markets debt, and
cash.
Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE
Subscribe to MFWire.com's News Alerts [click]
Email & Route 
Print 
Raw XML
