China is No Turkey in the Year of the Rooster
CONSHOHOCKEN, Pa., Feb. 9 /PRNewswire/ -- Philip Ehrmann, Gartmore Global Investments’ London-based head of the Pacific and Emerging Markets Equity Team and manager of the Gartmore China Opportunities and Gartmore Emerging Markets funds, shared his investment outlook on China and other emerging markets in a recent global conference call. As today is the start of the Chinese Year of the Rooster, the sign of people who speak their minds and are definite about their decisions, we offer a summary of his views.
CONSHOHOCKEN, Pa., Feb. 9 /PRNewswire/ -- Philip Ehrmann, Gartmore Global Investments’ London-based head of the Pacific and Emerging Markets Equity Team and manager of the Gartmore China Opportunities and Gartmore Emerging Markets funds, shared his investment outlook on China and other emerging markets in a recent global conference call. As today is the start of the Chinese Year of the Rooster, the sign of people who speak their minds and are definite about their decisions, we offer a summary of his views.
Among Mr. Ehrmann’s comments:
"Looking forward to 2005, we remain positive in our outlook for emerging equity markets. Valuations appear unchallenging, yet there has been a sea change in the quality of macroeconomic management since the Asian Crisis of 1998.
"Fiscal and monetary policies have driven down real interest rates and inflation while growth has been encouraging. You only have to look at Turkey and Brazil to see two shining examples of where we believe capital is now allocated more rationally, with fewer distortions. This increase in efficiency has led to higher returns on equity for emerging markets than for developed markets. Yet, despite these positive attributes, emerging markets are still valued at a discount to developed markets. We believe strong earnings growth and sector re-ratings can help close that gap in 2005.
"Many countries, among them Thailand and Indonesia, moved to free-floating exchange rates following the Asian Crisis of 1998; yet one country has remained conspicuously pegged to the weakening dollar -- China. A move to a looser peg has been discussed for some time now, but we believe it is difficult to predict the timing of any revaluation. Furthermore, we would expect the one-off increase in export costs to be readily absorbed over six to 12 months; many firms have outsourced production to China and will continue to re-export goods to their home markets come what may, while productivity gains should allow firms to trim costs.
"For us, the more interesting theme in the Chinese Year of the Rooster will be the rise in domestic consumption. Not only is the nation relatively new to modern patterns of consumption, but the urban population is estimated at an enormous 250 million. Moreover, the rural population still accounts for four-fifths of the whole, and interesting developments have been seen in the agricultural sector. A new culture of property rights is emerging, with tenant farmers encouraged to invest. The productivity gains could herald a second agricultural revolution, mirroring that of the 1970s.
"Elsewhere, we will follow the mantra ’Where China is short, we are long.’ Sectors such as steel and chemicals have been the recipients of massive investment during recent years, and we expect this to be reflected in large increases in capacity as well as a fall in margins in the near future. However, China will continue to import raw materials such as iron ore and coal for the foreseeable future, and we see gains to be made through investments in these sectors.
"We look forward to capitalizing on these opportunities, and we hope this Chinese New Year will herald good fortune for all our investors."
The opinions expressed herein are those of Gartmore Global Investments and may not come to pass. The information contained herein has been derived from the equity investment and research operations of Gartmore Investment Management as of February 8, 2005.
Investing in mutual funds involves risk, including possible loss of principal. The Gartmore China Opportunities Fund invests in securities of companies that are located in, or derive a significant portion of their earnings or revenues from, China and/or Hong Kong, and these securities may present substantially higher risks and greater volatility than those in most mutual funds. This Fund may not be appropriate for all investors. The Fund may purchase securities in initial public offerings, which can be very volatile and carry high transaction costs.
International investing involves additional risks, including currency fluctuations, differences in accounting standards, political instability and foreign regulations, all of which are magnified in emerging markets.
Investors should carefully consider a fund’s investment objectives, risks, fees, charges and expenses before investing any money. To obtain this and other information on Gartmore’s funds, please call 800-848-0920 to request a prospectus, or download a prospectus at gartmorefunds.com. Please read it carefully before investing any money.
Gartmore Global Investments (GGI) leads the U.S. component of Gartmore Group, the global asset management arm of Nationwide(R). Gartmore Group encompasses a unified investment platform with more than 185 portfolio managers, analysts and traders supported by a professional staff of more than 800.
The affiliated advisers that comprise Gartmore Group collectively manage more than $75 billion (1) in nontaxable and taxable assets. Gartmore Group’s clients include individuals as well as institutions such as corporate and public pension plans, foundations, endowments, mutual fund companies and insurance companies.
Formed in 1999 and based outside Philadelphia, GGI works in concert with the other affiliated Gartmore Group investment advisers situated in the United States (2). Together they have more than $36 billion (1) in assets under management. These affiliates maintain investment management and marketing operations in Conshohocken, Pa.; Columbus, Ohio; Detroit, Mich.; and Portland, Ore.
Based in London, Gartmore Investment Management plc (GIM) is Gartmore Group’s flagship international component. GIM, formed in 1969 and acquired by Nationwide in 2000, has investment management and marketing operations in Scotland, Jersey (Channel Islands), Spain, Germany, Italy, Sweden and Japan.
The following asset management affiliates conduct business under the trade name "Gartmore Group":
Gartmore Capital Management Ltd (3) Gartmore Fund Managers Ltd (3) Gartmore Global Partners (2, 3) Gartmore Investment Ltd (3) Gartmore Japan Ltd (3) Gartmore Morley Capital Management, Inc. (2) Gartmore Mutual Fund Capital Trust (2, 4) Gartmore SA Capital Trust (2, 4) Gartmore Separate Accounts LLC (2) NorthPointe Capital(R) LLC (2) 1. As of Dec. 31, 2004. 2. These are SEC-registered advisers based in the United States. 3. These advisers are subsidiaries of Gartmore Investment Management plc, which ultimately reports to Nationwide(R). 4. Together, these advisers do business as Gartmore Global Investments. Additional information can be found online: gartmore.us.
Nationwide(R) is a federally registered service mark of Nationwide Mutual Insurance Company.
CONTACT: Katie Cowley, +1-484-530-1509, or Greg Jawski, +1-212-850-5653,
both for Gartmore Global Investments
Web site: gartmore.us
gartmorefunds.com
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