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Fundamentals: making sense of current market conditions in Asia ex Japan

How does a portfolio manager deal with something as impactful but as uncertain as the coronavirus? What will the long-term impact be on stocks?

Introducing Fundamentals on Amplified

Welcome to our inaugural episode of Fundamentals on Amplified – a new equity-focused series on our podcast channel. Every month, our host Aoifinn Devitt, Head of Investment – Ireland, will sit down with our equity teams in London to explore the personal journey of our portfolio managers and discuss the most pressing issues shaping the asset class. She’ll also be joined by our strategists in Pittsburgh for their insights from time to time.

Contrarian style

In our first episode, Devitt is joined by Jonathan Pines, Portfolio Manager of our Asia ex-Japan capability, where he discusses everything from his interest in the investment industry from a young age to his contrarian investment style.

“We are more contrarian than value investors. Value investors buy cheap stocks, while a contrarian investing style means buying unloved stocks. An example of a contrarian stock might be a growth stock that is out of favour,” says Pines.

He adds: “Recently, there has been a high correlation between being a value manger and being a contrarian manager because value stocks have been terrible performers relative to growth for a long time. If you’re a contrarian manager, you’re naturally going to have more value stocks in your portfolio as that is where the bargains appear to have been.”

Coronavirus impact

Meanwhile, as fears about the economic toll of the coronavirus pandemic continue to unnerve investors, Pines views it as “a temporary phenomenon”.

He explains: “There are a couple of good things and bad things that may stop the decline in economic activity. The good things, of course, are an effective vaccine or if the virus subsides significantly in the summer.

“But it is possible, even if governments are not successful in containing the virus, that economic activity will resume if the view is taken that given the virus is out there it is a risk that one has to live with.

“We would place a very high probability on one of those things happening – that is, either a good or bad outcome where economic activity is relatively unaffected. Of course, the last thing we’re advocating is business as usual from a health perspective: people need to protect themselves and their families.”

To find out more, tune in to Fundamentals. 

Note: this podcast was recorded on 12 March 2020. 

  • The value of investments and income from them may go down as well as up, and you may not get back the original amount invested.
  • The views and opinions contained herein are those of Aoifinn Devitt, Head of Investment – Ireland, and Jonathan Pines, Portfolio Manager, and may not necessarily represent views expressed or reflected in other communications, strategies or products.

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