Somerset fund manager Edward Lam says he is finding opportunities in the “more treacherous” places in the world as he steers his £739m Somerset Emerging Markets Dividend Growth fund towards buying opportunities.
Noting heightened geopolitical tension in parts of the emerging world, Lam says: “Just over half of the MICEX (Moscow Exchange Index) is currently trading below 1x book value.
“I haven’t even looked at the Ukrainian market. We have been looking for opportunities in the Chinese property market.”
Lam has moved for Chinese property because no single company has more than a 2 per cent share of the market, something which Lam says gives rise to potential for consolidation.
He adds: “Because the sector as a whole is perceived to be a potential death trap, there may still be some value.
”The incipient investigation of the former Politburo member Zhou Yongkang will only add to the political intrigue, but investors should be wary of trying to interpret Mandarin ideograms.”
Elsewhere Lam is revisiting his technology exposure with the fund having 22.1 per cent exposed to IT.
Lam says: ”Although technology stocks have benefited us overall this year, there have been some recent setbacks.
”We have been reviewing and have now cut back our position in Taiwan Semiconductor despite strong results and a good near term earnings outlook.”
On the flip-side of this Lam has initiated new positions in two Indian IT companies – Wipro and HCL Technologies.
He says: ”Since we had been working on the ideas in the lead up to the Indian elections we were relieved that the sector did not respond to the election victory.
“Neither is extremely cheap, but in a world of heightened political risk, neither is particularly expensive, nor exposed to the turmoil. Not a great deal of attention is being paid to the sector as a whole.”