Jupiter Asset Management Ltd., which oversees about USD53 billion, bet on Asian consumer demand after the region’s sharpest equity selloff since 2011.
Ben Surtees, a London-based money manager for Jupiter, this month bought shares of Sands China Ltd., a Macau casino operator, and Ace Hardware Indonesia Tbk, a hardware store-chain operator in Southeast Asia’s biggest economy. That came after he bought noodlemaker Tingyi (Cayman Islands) Holding Corp. in August, and added to investments in food-packaging manufacturer CPMC Holdings Ltd. as it slid last quarter, he said.
“Markets did get very oversold during the summer on fears that the U.S. Federal Reserve is going to raise rates,” said Surtees. His Jupiter Asian Fund has outperformed 94 percent of peers this month, and 73 percent over a year, data compiled by Bloomberg show. “We’ve been adding to our positions.”
Asian stocks and currencies are rebounding in October, with a regional equity measure poised for its best monthly gain in six years, as futures markets suggest borrowing costs in the world’s biggest economy will remain near zero into 2016. The MSCI Asia Pacific Index traded Wednesday at 13.6 times estimated earnings, compared with a multiple of 12.4 times at last month’s low, data compiled by Bloomberg show.
Surtees plans to buy more Sands China shares, which he started accumulating early this month, after seeing strong visitor traffic at the company’s resort when visiting Macau during the Golden Week holiday. While the city’s gaming revenue fell for 16 straight months through September amid a Chinese anti-graft campaign that scared away high-rollers, receipts from mass-market gamblers recovered about 2 percent in the third quarter versus the previous three months, according to Credit Suisse Group AG.
“A lot of the negatives are already in the price,” Surtees said. “Valuations have halved, Sands’ balance sheet is fairly sound and the dividend payout ratio is high.”
While Surtees’ bet on Sands China is in sync with stock analysts who turned bullish on Macau casinos at a record pace this month, the fund manager took a contrarian view on Tingyi. Strategists cut their target prices by 18 percent on the maker of noodles since the end of June as earnings disappointed.
“Although Tingyi’s earnings has improved sequentially, the analyst community just wasn’t contented with the speed of improvement,” Surtees said. “After the release of the last quarterly results, the stock was sold off quite aggressively so we started buying.” MDT/Bloomberg
Sell, buy, hold: Busy times for top Macau casino analyst
Sands China top stock prognosticator has been changing his mind a lot lately.
Daiwa Securities Group Inc.’s Jamie Soo has switched his investment ratings on Sands China three times in the past two months, going from a hold to a sell, then upgrading to a recommendation equivalent to a buy before returning to a hold. Soo’s worth watching as his calls on Macau casinos over the past year have delivered the best returns among analysts tracked by Bloomberg.
Soo’s frequent flip flops help illustrate how casinos – a group of stocks already known for their high daily swings – are getting even more volatile lately. The 30-day volatility measure in Bloomberg Industry’s Macau Gaming index is at its highest level in almost four years.
Though share prices have been exceptionally volatile as of late, the overarching theme in Macau during the past couple of years has been pretty steady. The world’s biggest gambling hub is weathering through its worst-ever downturn with gaming revenue slumping for 16 straight months and the economy shrinking more than 20 percent for two consecutive quarters.
Soo’s optimism for Sands China lasted about a month as he cut the stock’s rating to hold, citing concerns about the casino operator’s ability to maintain its dividend payment levels, though he kept the target price unchanged at HKD28.17.
Sands China saw third-quarter profit fell 33 percent, missing analysts’ estimates, as competition for tourists intensified in the Cotai Strip area, the parent company Las Vegas Sands Corp. said in a statement yesterday.
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