||The view at the Miliken Global
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
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.