Japan market
Interview: Federated International Equity Fund---Landesman, Uri---President
>> research in motion, maker of the blackberry hand sets, came out with results for its latest quarter reporting earnings of 20 cents a share up from 19-cent-a-share loss a year ago. operating income at 31 cents, almost double the estimate at 17 cents a share. revenue, $153.9 million, above the semiconductors that―above the estimates of $146. in the extended hours, more action there and rim is the ticker. one of the exciting areas in investing this area has been the international marketplace. the morgan stanley eafe index is up 30% year to date and it’s been a strong year and there, federated international equity fund itself up 30%, far outpacing the s&p 500, up 24%. uri landesman is joining me now, the manager of that federated fund. i’m told of all the places in the world, japan is your favorite. i looked at your fund on the website and 24% of your assets as of a couple of weeks ago were in japan.
>> right. we think of the major places in invest in the world, japan has a couple of good things going for it. one is a recovery from about a 13 1/2 year recession so domestic demand will be decent next year and we believe that fear about the yen’s getting too strong versus the dollar are overplayed and that their exporters will be ok.
>> why is that?
>> we think that the bank of japan has signaled now very, very clearly that they will intervene. the reason they’re going to do this is simple. without the exports, there’s no way that the japanese economy can recover and it’s been so long since they’ve had a recovery, we think the government will not risk that recovery at all.
>> it was a few days ago you were talking about china life. do you own that stock ? were you able to get it?
>> we got a little bit of china life. it was obviously―the deal was very hot so a lot of people put in for it and we got a small allocation but a little piece of that.
>> that’s the i.p.o., actually. but then, other than saying this is a hot deal, i want to own it, now, do i want to own the company as an investment. would you buy it now in the after market?
>> i would probably wait for it to cool down a little bit. there was so much demand and the after market saw some of the people who didn’t get as much as they wanted on the i.p.o. stepping in and i’d wait for to trade back a little before building a full position.
>> let’s get back to europe, as your second largest holding, 19% of your fund’s assets in the united kingdom. that’s an interesting marketplace, somewhere i used to live not long ago.
>> actually, the 19% weighting in the united kingdom is a fairly substantial underweight. the growth index which i benchmarked is actually 25%, 26% u.k. so we’re underweight 600 basis points in the u.k. right now. we think all across europe the strength of the euro will make it very difficult to their exporters to do business in the united states and other dollar-denominated currency countries so we’re underweight europe and overweight japan.
>> and our previous guest says he sees the pound at 180?
>> i think that’s possible. the yeern europeans have not given indications they will intervene and the u.s. government has suggested they want a weak dollar through 2004.
>> on international markets, we talk to currency strategists about that and the fact that is the dollar still the safe haven currency. you have to invest internationally by prospectus. what effect does this increase of terrorism in the u.s. have internationally in your investment decisions, if any?
>> i think it’s very important to keep it in context. my sense is that the capture of saddam hussein, i guess about a week and a half ago, was very, very significant for world markets in general. perhaps even more for international markets than u.s. markets. i think that the intelligence that’s going to be gained from that and the shot in the arm that will give the forces fighting terrorism will make it a lot safer around the world right now and so while the threat of terror is very important considering investments, i think it’s gone down substantially over the last couple of months in that the war on terror is starting to be won, which will have dramatically positive impacts on world markets.
>> what ones in particular?
>> in general, when the risk premium goes down, the countries that benefit the most are emerging markets and that’s why not only we overweight japan, we’re also overweight in russia and taiwan.
>> japan is not an emerging market.
>> no, it is not. but russia, taiwan, singapore, israel, places like that we are now finding a lot of relative value and as risk premiums go down, those markets will probably outperform.
>> we have 30 seconds. why would you buy into russia now?
>> we think the recent fears that the government was getting anti-business o are way overblown and we think putin had a problem with one particular guy and he’s taken care of him and now the other companies will thrive and that the government there remains pro business.
>> speaking of business, we have do a little business. thank you very much. uri landesman, fund manager of the federated international equity fund. citigroup and other u.s. lenders may be close to resolving a three-year long battle with an indonesian paper company. that’s coming up.
