Saturday, March 29, 2008

Temasek's Fund Says Investors Crossed `Maximum Fear'

Temasek Holdings Pte's fund management unit said investors have passed ``the point of maximum fear'' amid the global credit squeeze and it expects to meet a target of $3 billion in assets by June.

Fullerton Fund Management, which oversees $2.5 billion of third-party money and an undisclosed amount of capital for Singapore's sovereign wealth fund, saw the U.S. Federal Reserve's decision to rescue Bear Stearns Cos. from bankruptcy as a turning point, Fullerton's Chief Executive Officer Gerard Lee said.

``The Fed coming in to facilitate JPMorgan Chase & Co.'s purchase of Bear Stearns is a watershed event, and most bottoms are found during watershed events,'' Lee said in an interview in Singapore yesterday. ``From that perspective, we could have already crossed the point of maximum fear.''

The Fed stepped in with JPMorgan on March 14 to provide emergency funding to Bear Stearns in the biggest government bailout of a U.S. securities firm. Before the announcement, Bear Stearns's clients withdrew $17 billion in two days amid speculation that the firm was running short of cash.

Templeton Asset Management Ltd.'s Mark Mobius said he ``generally'' agrees with Temasek's assessment that the markets have reached a bottom.

`Damn Close'

``If we haven't achieved it, we're damn close,'' Mobius, who oversees $47 billion in emerging-market equities, said in a phone interview from Hong Kong today. ``With the kind of liquidity that's pouring into the system, with the Fed, and now the European Central Bank and others putting more money into the system, we think stock prices are not going to remain down. We think there's a good chance of growth going forward.''

Some funds are already planning to buy shares in Asia, where stocks have tumbled this year even as economies in China and India continue to grow. The MSCI Asia Pacific Index trades at 14 times estimated earnings, after slumping 13 percent the past six months as fallout from the U.S. subprime crisis spread through Asia, making stocks in the benchmark 36 percent cheaper than the five-year average.

Value Partners Group Ltd., Asia's second-largest hedge-fund manager, is buying stocks in the region that were battered by the collapse of the U.S. subprime mortgage market, Chief Investment Officer Cheah Cheng Hye said this week. The Hong Kong-based asset manager aims to start a new fund in the second quarter to invest in Greater China property stocks, Cheah said.
Funds such as Clariden Leu AG, which manages $300 million, said the recovery from the U.S. housing crisis may take one to two years. Sales of new homes in the U.S. fell in February to the lowest level in 13 years as tighter loan restrictions and the prospect of even lower prices kept buyers away.

`Inflexion Point'

``What we have seen in the last couple of weeks culminating in the rescue of Bear Stearns by the Fed and a further pump of liquidity in the market may somewhat signal an inflexion point in the crisis but this bottoming out phase, we reckon, will take a long time,'' Michael Foo, head of Asian portfolio management at Clariden, said in an interview today.

Fullerton is still bullish on prospects in Asia, where it has most of its assets, and it said the goal to manage $3 billion excluding Temasek's funds by mid-year is achievable. State-owned Temasek manages a portfolio worth more than $100 billion.

``The fundamental reasons for this secular growth are all in place,'' Lee said. ``The few of the big economies are found in Asia. I'm talking about China, India, Vietnam and South Korea. So Asia being a destination for investment money from the developed world will continue to grow.''
Fullerton's main customers are wealthy individuals in Japan, South Korea, Taiwan, Hong Kong and institutions in Singapore where, in 2003, it became a separate unit of Temasek.
Fullerton aims to expand in the U.S., Europe, Australia and the Middle East, working with local partners to sell its funds or distributing directly to investors. Earlier this month, it teamed up with EFG-Hermes Asset Management to bring Middle Eastern funds to Asian investors. The company wants to grow its Middle Eastern and North African fund to $100 million within a year, Lee added.

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