|
UMB Scout International Fund's lead manager on Bloomberg Television's "In Focus."
January 11, 2007
| Time: | 12:00 PM - 01:00 PM |
| Station: | Bloomberg |
| Location: | Network |
| Program: | In Focus |
MONICA BERTRAN, anchor:
Well, we had Christopher Smart from Pioneer Investments who was on earlier in the hour. He's still bullish on emerging markets, even though there was a pull back. But James Moffett, who is a fund manager with UMB Asset Management, more cautious on emerging markets, and he thinks there are some nuggets of values. We'll find out where. He's joining us from Kansas City, Missouri right now.
So James, welcome. Let me start with that as we mentioned that Christopher Smart from Pioneer, he was a little bit more bullish. You're not as bullish about the emerging markets. Why though? Why are you more cautious?
Mr. JAMES MOFFETT (Fund Manager, UMB Asset Management): Well, there's a couple of reasons we're more cautious: one, we see the overall macro-environment as a growth slow-down, and as the United States leads it and it spreads around the world, by the time it gets the emerging markets, it's going to be more pronounced, have more effect. And we also - these have done very well and the evaluation is not as cheap as it was. And the third reason is that they're the more volatile, higher risky market and we think this is a time to be just a little more cautious across the board.
BERTRAN: You know, we saw this back like just before the summer, as well as in May, when we saw a bill sell-off, some say linked to commodities, but you think it's a little bit more than that. That's what I hear you saying?
Mr. MOFFETT: Well, I think commodities are part of that but it's also just--I mean, it depends on the country and what they make. I mean they're all different. Some are doing better than others, but overall we're just a little more cautious. That's what it boils down to.
BERTRAN: Let me ask you as well about where we go from here. I mean, much lower, do you think, in terms of the some of the sell-off that we've seen recently?
Mr. MOFFETT: On a trading basis, I don't know. You know, it makes sense that we've had a very strong market move, particularly going into the end of the year as managers scramble to get their money invested. Now it should be - a pull back wouldn't be a total surprise, but we don't see any real fundamentals behind it that there's anything wrong. It's just that the market has gotten a little ahead of itself, particularly in the emerging markets.
BERTRAN: Let's talk about an area that you do see, as we mentioned, sort of a nugget of value, and that happens to be Brazil. What do you see in Brazil that's so attractive, opposed to some of the other emerging markets?
Mr. MOFFETT: Well, we see several things: one is that it's a large, diversified economy making everything from aircraft to growing soybeans. So, there's a balance there. It's growing at a moderate basis, and inflation is actually coming down, which we think should be able to help price ratios rise a little bit.
So, we like the macro-environment in Brazil. And then within that, as I said, just like the rest of the world, we've gotten a little more conservative. We like some consumer staples. We've cut back on Petrobras, the oil company, as an example.
BERTRAN: What emerging market is the cause for most concern, do you think?
Mr. MOFFETT: I don't know. I don't have any money there, I hope.
BERTRAN: Well, you know, I was going to say, we talk a little bit about the commodities story and its link to many of the emerging markets, even Brazil, though, so does that have some risk? Even though I know you say that you like it and have pulled back a little in that country as well?
Mr. MOFFETT: Well there's no question, it's got some commodity risks. It's a major iron ore producer, pulp, soybeans, wheat, beef. There are lots of things that it makes in exports that are subject to price fluctuations.
So there's room for concern. They also manufacturer goods that they export, so, as I said, we think it's fairly well balanced and it's a substantial, internal economy. One hundred seventy five million people that are leading their own economic life, so to speak.
BERTRAN: And the one stock you like there is AmBev, which happens to be a beverage company that seems to be pretty stable. Where will growth come from in that particular company, though?
Mr. MOFFETT: The growth is coming from increased demand for premium beers. There are beers that are more on the high end of the beer spectrum: Brahma and Antarctica. This is - it's like worldwide, the people are upgrading what they want to consume and that's happening in Brazil, too. And they've got 70 percent of the beer market, so they've got some pricing flexibility. They're well run, they're growing at 20 percent a year, say, with a PE ratio of 24, so it looks like a fairly good value for us.
BERTRAN: James, appreciate it. James Moffett, Fund Manager at UMB Asset Management.
|
