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THE INVESTOR
Viewpoint
Alistair Thompson,
Senior Portfolio Manager,
First State Stewart Asia
Ignoring the ups and downs of the markets and
instead seeking out companies with quality
management that can provide longer-term returns
is key to success
THE INVESTOR CENTRE
Howdoyoudescribeyour
approach to investing?
We are conservative and patient with
an investment horizon of three to five
years.That gives us the luxury of
looking for companies with quality
management capable of steady and
sustainable growth. Before we invest,
we spend time getting to know
management teams and ensuring we
are comfortable with a company’s
culture, risk management, governance
and so on.We particularly like finance
teams with a conservative approach.
We spend far more time thinking
about what could go wrong than what
could go right – that means that we
tend not to get caught out too often.
But we are working in developing
markets, including India andThailand,
where the potential rewards are high.
Can you talk about some of the
holdings in your portfolio and
how these alignwith your long-
term investment objectives?
A good example is the Australian
company CSL, based in Melbourne.
In many ways this typifies what we
look for in a company. It manufactures
The quarter saw the arrival of President
Trump in theWhite House, determined
to put hisAmerica First approach
into immediate action.Trump’s talk
of favouring US companies and
infrastructure spending, together with
moves to loosen regulation on sectors
such as banking, kept US equity markets
buoyant. But uncertainty about how
effectively the administration will be
in implementing many of its policies
remains. Meanwhile, the markets have
come to expect a tightening in
monetary policy, involving gradual
interest rate increases by the
US Federal Reserve.
The vagueness about the terms on
which Britain would leave the EU
was largely resolved and Parliament
paved the way forArticle 50 to be
triggered. Demands for a second
referendum on Scottish independence
then added to the uncertainty, and
underlined the constitutional tensions
created by Brexit.
The UK economy continues to
perform better than predicted, with the
Bank of England revising upwards its
growth forecasts for 2017. But, with
the post-Brexit fall in the value of
sterling now filtering through to the
high street, inflation has started to rise.
Around the world, higher inflation is
once more being seen as a risk, with
some fearing this might fuel a rise in
global interest rates.
influenza vaccines and
immunoglobulin products such as
blood-clotting agents for
haemophiliacs. CSL has very
successful products, an impressive
array of innovations in its R&D
pipeline, and took on 2,000 new
hires last year.
The conglomerate SM Investments,
based in the Philippines, is another
company we know well. It has
a range of interests, from property
to retail to banking, and is run
by the Sy family, one of about half
a dozen family groups that are
economic big players in the
Philippines.The Sy family have also
shown that they can successfully
navigate the shifting political
landscape.
In India we have invested
in the private-sector bank HDFC.
A lot of people feel Indian banks
are expensive but millions of
Indians are opening bank accounts
and we see enormous potential
for HDFC, especially in the new
personal payments system that
is being opened up by phone-based
technology.
THE FUND MANAGER VIEWPOINT