Emerging market picks from GLG, Brevan Howard and Canyon

By Lawrence Delevingne

Tue May 1, 2012

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Russian rubles, Nigerian T-bills and Turkish banks among the calls made at a Milken Institute Global Conference panel.

  The view at the Miliken Global Conference

LOS ANGELES -- Top traders from some of the world's largest hedge funds talked up their investments in emerging markets at the Milken Institute Global Conference today, eschewing the traditional industry debates over U.S. equities, European debt and other crowded trades in the developed world.

Filippo Cipriani, senior trader at $34 billion Brevan Howard Investment Products, recommended going long the Russian ruble and expects a 2% or 3% appreciation this year. "There's a tremendous opportunity," said Cipriani, noting Russia''s low debt, current account surplus and government plan to widen the band of potential ruble valuations.

On China, Cipriani said he took a negative view of the renminbi given China's lower trade surpluses, decreased government spending and liberalization of the currency itself.

For Africa, Cipriani recommended Nigeria and said Brevan Howard was long the country's Treasury bills and currency (the naira). "You are buying a region where there is a lot of risk and apprehension already priced in," he said.

Bart Turtelboom, co-head of global emerging markets at MAN Group's $26 billion GLG unit, recommended investing in Russia (watch the development of credit markets), Azerbaijan (it takes some stamina, but it's a "spectacular place") and Turkey (where the banking sector is especially attractive).

Turtelboom said Africa was "on our radar" but noted that attractive investments are often far too small to build a meaningful position. GLG likes the Ugandan schilling but said investors should focus on basket of high risk, high reward small cap stocks over 10 or more years.

Nathan Sandler, co-founder and managing partner at emerging markets credit hedge fund ICE Canyon, part of $17.4 billion Canyon Capital Advisors, recommended five broad industries for emerging market investment: power generation and distribution; oil and gas; mining exporters; financial services; and utilities.

Sandler also pointed out there is much more opportunity in emerging market debt than before. "Credit stands out as extremely cheap," said Sandler, noting private markets like distressed debt, bank loans and other special situations.

ISSN: 2151-1845 / CDC10004H

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