Newton Investment Management Ltd.’s Jason Pidcock bought China Mobile Ltd. shares last month, while keeping a defensive stance on bets related to the world’s second-largest economy, the top-performing fund manager said.
Pidcock, who manages the 1.4 billion-pound ($2.2 billion) Asian equities fund that has beaten 98 percent of its peers in the past five years, also bought HTC Corp. as it fell in December and January below NT$500. He will keep a “fairly defensive” stance on bets related to the Chinese economy as it grows at 5 percent to 7 percent a year, he said in a phone interview from London.
Wen Jiabao, China’s premier, cut the country’s economic growth target for 2012 to 7.5 percent this week, down from 8 percent over the past seven years, as the euro area’s sovereign-debt crisis and sluggish U.S. recovery limit demand for goods from the world’s largest exporter.
“Even if they achieve 7.5 percent growth this year, that will hit profitability in sectors with leverage like property and banks,” Pidcock said in the interview. Newton has about 47 billion pounds in assets under management. “We are a little more cautious on China than most people and our direct exposure is fairly defensive.”
China Mobile’s Dividend
China Mobile pays a dividend yield of 3.9 percent and trades at 10.6 times estimated earnings for this year, according to data compiled by Bloomberg. The company’s payout to investors may increase at least 10 percent every year and dividend growth may climb at a faster pace than earnings, Pidcock said. The fund’s purchase of China Mobile’s shares added to its overweight position in telecommunications stocks.
The fund has an underweight stance on banks, meaning that it holds fewer of their shares than are represented in benchmark measures. Its biggest position is in Taiwan Semiconductor Manufacturing Co. Ltd., which reached its highest price since 2000 last month.
The fund has more of its assets in Australia -- 27 percent -- than any other country. Pidcock holds Telstra Corp., Transurban Group, Australia & New Zealand Banking Group Ltd., IOOF Holdings Ltd. and AMP Ltd. He also has stakes in Coca-Cola Amatil Ltd., Sydney Airport, Woodside Petroleum Ltd. and APA Group.
Pidcock’s fund has gained 9.4 percent this year, less than the 11 percent climb on the MSCI Asia Pacific Index, according to data compiled by Bloomberg. The fund has beaten its peers over one and five years, the data show.