Disciplined HK stock picking wins through

PUBLISHED : Friday, 21 February, 2003, 12:00am
UPDATED : Friday, 21 February, 2003, 12:00am

Credit Agricole Asset Management Hong Kong has won the five-year Hong Kong equities award for the performance of its Indocam Asian Portfolios-Hong Kong fund.

The fund is managed by investment manager Chau Yee-man, who attributed the win to a disciplined stock-picking approach and long-term performance.

'Stock selection incorporates qualitative criteria with a focus on financial position, growth prospects, industry outlook and quality of management,'' she says.

Quantitative inputs included building comprehensive financial models for each recommended stock.

Risk management is another key to the fund's success, she says.

'In managing risk, we perform scenario analysis and sensitivity analysis to assess a company's vulnerability to external shocks, thereby avoiding problem companies.

'We are able to focus on those that are able to generate growth amid a difficult operating environment.''

Ms Chau has managed the fund since October 1999, but she says winning the award was a team effort by everyone involved, including previous managers. In a move subject to shareholder approval, the IAP-Hong Kong fund will become part of the group's international flagship fund, Credit Agricole Funds, from April 7.

The IAP-Hong Kong fund portfolio will be transferred into the specially created CA Funds Hong Kong portfolio, which will be managed along similar lines as the previous fund. Ms Chau says there will be no impact on the management of the product resulting from the restructuring.

During a challenging period for Hong Kong equities, the IAP Hong Kong fund has focused on identifying an optimal mix of value and growth stocks, with undervalued stocks standing out as the main investment targets.

Ms Chau says the local financial sector looked interesting from a mergers and acquisitions and corporate restructuring perspective.

'This will likely continue throughout 2003, given historically low funding costs,'' she says. 'We expect more M&A speculation to return to the banking sector, offering trading opportunities despite a lack of improvements from a bottom up perspective.''

At the end of January, the total size of the IAP was US$13 million.