Marathon tackles the three bears
Marathon Asset Management founding director Jeremy Hosking says the global sharemarket has been under pressure from what he calls the “three bears” but there are signs things are improving.
Tuesday, September 21st 2004, 6:45AM
Marathon runs an international fund which Tower’s Global Fund feeds into. Currently Marathon has US$23.5 billion under management.
Hosking, speaking to a group of advisers in New Zealand yesterday, outlined some of his views and themes in world economies which will impact on investors.
Hosking says there is an interesting trend developing in the United States which should benefit a whole range of companies.
Currently consumers are spending at an all time high, and having what he calls a party, meanwhile companies are holding back on their capital spending in what he calls the hangover.
Hosking says capital spending is its lowest level since the mid-1950s.
Consequently companies have record levels of cash on their balance sheets.
“It’s most unlikely that this cash will stay horded on the balance sheets for long,” he says. The money will be used for a range of things including mergers and acquisitions, capital spending, or it will be returned to shareholders.
Hosking reckons about one-third of United States companies will be direct beneficiaries of this increased business spending and Marathon is positioning to take advantage of it.
Hosking is bullish on Asia and his views have been reconfirmed after at trip to the region last week.
He says Marathon’s positioning in Asia has been a positive performer for the fund and he sees that continuing.
Currently the fund is strongly overweight Asia ex Japan and underweight North America.
While Hosking is keen on Asia, he has some concerns about China and believes the boom will turn to bust. However, he predicts that the bust is still a couple of years away.
Overall he is relatively optimistic about global equity markets for the next six months or so and it probably suits a fund like Marathon which takes a contrarian approach to stock picking because of the pressures in the market.
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