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”Our global equity strategy is to invest in a concentrated portfolio of companies with strong balance sheets and low debt to earnings which operate in industries with high barriers to entry and low capital intensity,” says London-based Fourie. “We look at opportunities to invest in well-run businesses on the back of market volatility. For example, volatility in the European equity markets led to three mini-corrections this year in Louis Vuitton stock, and we took advantage of all three corrections to increase exposure for our clients.”

He says these corrections occurred as a result of investor wariness of emerging markets, including Asia, to which European multinationals remain exposed. “However not all stocks in the emerging markets are attractive at the moment. For instance, we’re not going to go ahead and buy stocks such as Prada, which is listed on the Hong Kong Stock Exchange, because it is too expensive.”

Fourie says that valuations in the US are reflecting a better economic environment in that country. “The US markets are up 20% on a total return basis, compared to Hong Kong which is up 1% and Europe which went up 10%. So whereas a year ago, we really liked stocks such as Johnson & Johnson and Google, these stocks are up 30%, so we have reduced our exposure to them.”

SPI has however favoured MasterCard, which Fourie describes as a secular growth company. “This is a new position for us – we had a chance to buy in March this year when the price was down. MasterCard currently has very low penetration in areas like Brazil and India, and we believe there are big long-term opportunities there.”

From the proceeds of some of the US stock sell-offs, SPI started looking at Samsung during May and June this year. “The weak Japanese Yen has resulted in Korea – a major trading partner of Japan – becoming less competitive. So from a valuation point of view the market was already quite cheap. Samsung stood out for us as a long-term winner – we picked up the stock at levels about 15% lower than today’s trading levels.”

SPI is investing in emerging markets through stocks like Philip Morris International, which has 40% to 50% exposure to these markets. SPI is also currently looking at Coca-Cola Amatil, one of the largest bottlers of non-alcoholic ready-to-drink beverages in the Asia-Pacific region. “This stock is down 14% owing to a slow-down in business in Australia and Asia. It may be an opportunity for us if some of our US stocks like Pepsi-Cola continue to outperform and become too expensive.”

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