Sat, Nov 17, 2007 - Page 12 News List

Fund manager finds value in Taiwan

UPSIDE A Singapore-based fund said that with their lower PE ratios, Taiwanese tech stocks offer better gains than their Chinese counterparts whose valuations had shot up

By Joyce Huang  /  STAFF REPORTER

The nation's technology companies could outperform their red-hot Chinese peers, making them a more attractive target for foreign investors, two Singapore-based fund managers said yesterday in Taipei.

"Shares of the local high-tech sector are very likely to see an upside of over 30 percent for they also average the second-lowest price-to-earning (PE) ratio among Asian markets," said Jonathan Ross, a managing director at Blackhorse Asset Management Pte Ltd.

Founded in 2001, Blackhorse recently launched its Blackhorse Early-Stage Technology Fund (BEST) -- one of the few foreign funds focused on Taiwanese technology shares.

BEST has a fund size of US$30 million, with a goal of expanding this to US$400 million, Ross said, adding that the fund has set aside 20 percent as unredeemable capital -- a so-called side-pocket -- for investment in Taiwanese technology companies that have not yet gone public.

Ross estimates that the PE ratio of Asian technology stocks averages around 12, lower than the average PE ratio for all Asian stock markets of 17.

Another Blackhorse managing director, John Engle, said that the fund management company, which manages a total of US$680 million in global markets, has put 30 percent to 40 percent of its Asian exposure in Taiwan.

"We are quite heavily weighted in Taiwan," he said.

Ross said the company was also upbeat about China growth, but Chinese stock valuations had shot up significantly, making it difficult to find "any good investment opportunities there."

He advised international investors to bet their money on Taiwanese shares, many of which are the driving force behind the growth in China since Taiwan is not only home to global high-tech innovation, but also an engine to China's exports.

"Taiwan is the best leeway to take advantage of gains in China," said Ross, formerly the head of Asian technology research at Goldman Sachs Asia.

Companies in the solar power, light emitting diode, IC design and panel industries are likely to post the biggest gains among technology stocks, Ross said.

In related news, Goodyear Tire & Rubber Co (固特異公司), one of the world's leading tire makers, yesterday announced its plan to invest NT$300 million to expand its factory in Taoyuan before the end of the year.

"This new investment underscores our confidence in Taiwan's manufacturing capabilities, with its unprecedented competence in innovation, high quality and a flexible work force, as well as its supply chain management," said Pierre Cohade, president of Goodyear Asia Pacific, at a press conference yesterday.

Cohade said the increased investment in Taiwan was in line with Goodyear's global investment strategy -- announced in August -- to fuel business growth and increase its value-added production capacity by 40 percent worldwide.

Goodyear Taiwan has also received a corporate safety award for zero-lost-time for 3,000 consecutive days, demonstrating the company's commitment to upholding safety standards throughout its global facilities.

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