Investors who rush blindly to buy Asian technology stocks are missing a fundamental point about the region, Invesco's Alfred Ho Kai-shing believes. In the global scheme of things, the region is still largely a cyclical commodity play rather than an area packed with innovative world market leaders that can produce consistent earnings growth over the long term. In the 1960s and 70s, the region rode the roller-coaster in commodities such as rubber and footwear, said Mr Ho. By the 90s it was more a captive of the cycles for steel, petrochemicals and DRam computer chips. 'People have learned from the experience of the last few years that Asia ex-Japan is not a Microsoft of this world,' said Mr Ho. 'If you look at Microsoft over the last 10 years it is definitely a secular growth stock. It delivered earnings growth of like 35 per cent, 40 per cent every year.' In contrast, Mr Ho, who manages the Invesco GT Asia Enterprise Fund, says of a universe of 3,000 ex-Japan stocks he can invest in, only 20 have managed earnings growth for five straight years. 'Against that backdrop we think that you need to have a valuation bias. When a stock gets very expensive or a stock has already priced in a lot of the growth in the future you have to have the discipline to lock in the profits,' he said. 'That is in contrast with growth investing in the US. You just buy and hold because the intellectual capital in the US is much higher, the value added in the US is much higher as compared with this part of the world.' One of the Asian tech stocks Mr Ho sees as overvalued is China Telecom. This year it has not only leapfrogged HSBC to become the SAR's biggest listed company but is now approaching the valuation of Japan's NTT DoCoMo, which is running the world's first mobile-phone Internet-access service. 'Someone has to convince me why in terms of technology China Telecom is better than NTT DoCoMo,' said Mr Ho. 'We own some tech stocks. We are not completely against tech,' he said. 'There are companies there, like Taiwanese electronics manufacturers, some of the Korean technology companies, they are for real. But we don't participate across the board in whatever is hot.' What is hot for Mr Ho is the highly unfashionable old economy which is starting a cyclical upturn backed by rising global demand and tighter supply due to the Asian crisis. 'When you think about it, it is really ironic because the old economy is having a shrinkage in capacity, they are not building, they have pricing power because of stronger demand, but nobody cares,' he said. 'You have the new economy everybody is throwing a huge amount of money into. You have no pricing power.' The kind of over-investment in old economy sectors that created the spectacular bust of the Asian crisis is now happening in new economy areas, Mr Ho said. 'I don't know how fast you will get excess capacity in that area but that's what's happening now,' he said. 'What is going to break this? I think it is going to be very company specific. When people realise, 'Oh this company is not delivering anything close to my expectation'. Then gradually you will shift back to the old economy stocks with earnings growth.' One of Mr Ho's key old economy plays is the banks. 'If you look at the performance of a typical banking sector, usually it lags behind an economic recovery by one to two years,' he said. 'Economic growth is picking up, so I think there is a compelling case for owning them.' Two of his top picks are Shinhan Bank and Kookmin Bank, South Korea's two largest retail banks. Both have raised capital and cleaned up their balance sheets by writing off or restructuring bad debts and are set to lead the South Korean banking sector with lending growth of 15 to 20 per cent. 'Earnings momentum this year is going to be very strong,' said Mr Ho. With rising global growth and trade leading to higher freight rates in mind he has made Singapore's Neptune Orient Lines another of his top holdings as an old economy play. Following Invesco Asia's house approach of buying growth at a reasonable price, he has taken advantage of an unsung correction amongst some of Hong Kong's biggest names in the last month as speculative players rotated cash through the latest hot technology plays. He has added to his holdings of Li Ka-shing's flagships, Hutchison Whampoa and Cheung Kong and another company that is being viewed as a closet technology play, Sun Hung Kai Properties (SHKP). With the Li companies down by up to 20 per cent from their highs and SHKP trading on Tuesday at $72.50, down from a high of $88.50, the opportunities were simply too good to miss, said Mr Ho. For the year to February 3, the Invesco GT Asia Enterprise Fund was a middle-ranker, coming 50th out of 88 Asia ex-Japan funds with a return of 72.77 per cent, according to Lipper Asia. But over longer distances it was among the winners. For three years to February 3 it was 12th of 75 funds with a gain of 10.16 per cent and over five years it was fifth of 56 funds with a return of 66.41 per cent. And for the real marathon stretch of 10 years it took this year's South China Morning Post fund manager of the year award in its category. Alfred Ho Kai-shing 1986: Graduated from University of Wisconsin Madison with bachelors degree in economics; started work with as forex trader with Barclays in Hong Kong. 1988: Returned to University of Wisconsin Madison. 1990: Graduated with masters degree in finance; started work at WI Carr in Hong Kong as an analyst. 1992: Hong Kong and China fund manager with Aetna, later given responsibility for Asia ex-Japan portfolios. 1995: Aetna taken over by Invesco. 1999: Promoted to chief investment officer of Invesco Asia. Alfred Ho Kai-shing 1986: Graduated from University of Wisconsin Madison with bachelors degree in economics; started work with as forex trader with Barclays in Hong Kong. 1988: Returned to University of Wisconsin Madison. 1990: Graduated with masters degree in finance; started work at WI Carr in Hong Kong as an analyst. 1992: Hong Kong and China fund manager with Aetna, later given responsibility for Asia ex-Japan portfolios. 1995: Aetna taken over by Invesco. 1999: Promoted to chief investment officer of Invesco Asia.