FUNDVIEW-GLC upbeat on Chinese equities, Swedish crown

* Favours Chinese equities as govt drums up domestic demand

* Says long on Swedish crown and Korean won

* Buys into dollar, bearish on bonds

By Brenda Goh

LONDON, Nov 1 (BestGrowthStock) – Hedge fund GLC said equities are
its preferred bet in light of recent moves by central banks and
governments to limit currency appreciation.

“It’s a tricky period,” Steven Bell, co-manager of the $485
million GLC Global Macro fund, told Reuters.

“We think it’s more attractive to be just long equities
outright,” he said. “We prefer to buy equities because of the
risk of capital controls.

“Central banks outside the U.S. have been moving together
and taking aggressive steps to weaken their currencies. A lot of
that liquidity is leaking into the stock market.”

GLC manages around $1.7 billion in assets. The fund is long
on the Chinese H-Share index (.HSCE: ), which Bell says is “the
most attractive equity market on a relative basis”.

“There’s a lot of negative sentiment relating to inflation
and overcapacity in China,” he said.

“We think those worries are overdone and inflows from abroad
remain quite a strong support for the market.

“A lot of domestic investment opportunities are less
attractive than the stock market (index). There’s a government
policy toward domestic demand and infrastructure developments
which will benefit the (Chinese) stock market,” he added.

Bell said the fund’s biggest currency position is long on
the Swedish crown (SEK=: ), while he is upbeat on the Korean won
(KRW=: ), believing it is cheap for a strong economy.

About Sweden, he said: “It’s one of the strongest-growing
economies in Europe. Its got one of the highest purchasing
managers’ indexes in the world, there’s a housing boom or strong
housing market, so (the currency) is an attractive area.”

The purchasing managers’ index is a key indicator of
industrial activity ahead of official data and is used to
measure the economic health of a country’s manufacturing sector.


GLC also sees growth picking up in the U.S. and has a “small
long” on the U.S. dollar (.DXY: ), which has fallen more than 10
percent since June.

This optimism is hinged on the continued implementation of
the U.S. Federal Reserve’s quantitative easing strategy, on
expectations the corporate sector’s recent better-than-expected
earnings season will encourage hiring, said Bell, who also sees
the U.S. housing market slowly recovering.

“We tend to invest by looking for cheap markets with
negative sentiment and turning newsflow.” Bell said. “And as far
as the dollar’s concerned, there’s definitely a lot of negative
positioning and a lot of negative sentiment.”

The fund is bearish on bonds but has yet to take a position.

“We think the bond market is going to sell off
significantly, but not yet,” he said. “The issue with bonds is
that they’re clearly expensive — yields have been pushed down
to very low levels.”

“Because rates are so low, they’re priced for low inflation,
low growth and low rates for an indefinite period, so I think
the next big move — it’s almost a mathematical requirement —
is a rise in yields, because they’re so low.”

(Editing by David Hulmes)

FUNDVIEW-GLC upbeat on Chinese equities, Swedish crown