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Emerging markets to face challenges in 2011


Date: Monday, February 28, 2011
Author: Press Release

Steven Bell, chief economist at GLC Ltd, one of London's oldest hedge fund firms, prefers emerging markets currencies to equities

Investment case to be presented at Hedge Funds World Middle East Conference in Dubai from March 7-11


Dubai, UAE, 27 February 2011: 2011 is tipped to herald strong global growth, though it will impact different economies according to their economic cycle, says Steven Bell, chief economist, at one of London's oldest hedge fund manager, GLC Ltd.

Many of the emerging market giants - notably China and India - are battling inflationary pressures; others like Brazil have strong domestic inflationary pressures that are disguised by the temporary benefits of its currency strength. This suggests that emerging market currencies may generate attractive returns but equities are less attractive.

"The theme of emerging market inflation and preference for developed market equities over emerging markets is rapidly becoming an established view," Bell explains. "Chinese H shares have underperformed the S&P 500 by 20% since November. We are structurally bullish on emerging markets in general and China in particular, but there needs to be a shift in monetary stance before emerging market securities become attractive. Divergence between developed and emerging markets is already visible in the relative performance of stock markets. We continue to prefer developed equity markets where inflation pressures are limited, valuations are reasonable and capital flows are supportive."

Bell expects a shift from manufacturing to services sector with cost and margin pressures leading to underperformance in some sectors. "However, profit growth looks set to remain firm in developed markets, especially in the US which one of our favourite markets. The UK looks set to raise interest rates, raising fears of the US Federal Reserve following suit but we think the US can sustain ultra-low rates for a considerable period."

GLC's flagship, the Diversified Fund, was up nearly 18% annually over the past three years, putting it in 35th position in Barron's Top 100 Hedge Fund ranking in 2010. The fund, according to Bell, has been able to deliver consistent long-term returns because it relies on uncorrelated strategies that invest across various markets and has demonstrably outperformed markets, especially during the recent financial crisis in 2008. Bell's fund, GLC's discretionary Global Macro strategy, has $570m in assets traded and is notable for having generated strong positive returns during the financial crisis.

Bell will present his asset management strategies at the 2011 Hedge Funds World Middle East conference which is bringing together over 40 international and local institutional investors, and representing over $ 3 trillion in capital. The conference is scheduled to take place at the Jumeirah Beach Hotel in Dubai from March 7-10, 2011.

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About Hedge Funds World Conference:
Hedge Funds World Middle East is the region's largest hedge funds conference. Now in its 12th year, it is attended by over 600+ participants including some of the world's top performing hedge fund managers and the Middle Eastern investor community. For more information, please refer to http://www.terrapinn.com/conference/hedge-funds-world-middle-east

 

About GLC:
GLC Ltd ("GLC") is an independent alternative asset manager based in London, United Kingdom. Established in 1992 by Lawrence Staden, GLC focuses on various absolute return strategies - equity statistical arbitrage, short- and mid-term CTAs and discretionary macro. Today, GLC manages approximately $1.35 billion in assets traded from a global institutional investor base and invests in a range of asset classes including equities, fixed income, foreign exchange and commodities and their derivative instruments. Investors have access to a range of single and multi-strategy funds. GLC provides five different strategies and bespoke managed accounts tailored for institutional clients.

GLC is authorised and regulated the Financial Services Authority in the United Kingdom. GLC is also a signatory to the Hedge Funds Standard Board.

For more information, please contact
Shilpa Mathai, Finsbury
Mobile: +971 50 346 3979
shilpa.mathai@finsbury.com