Michael Bunker, London-based chief investment officer of Pacific investments for GAM, which has US$2.1 billion under management, has seen interesting times in the Asian markets since he began investing here in the 1970s.
The Hong Kong-authorised GAM Pacific Fund, which he manages with Hong Kong-based colleague John Mytton, celebrates its 20th anniversary later this year.
'It is quite exciting here at the moment,' he says. 'There is a nice balance of opportunities. All of a sudden we are getting more candidates that meet our standard for investment.
'We have had years of problems with the Japanese economy in the 1990s and then the financial crisis in Asia, which made it difficult to find companies because they had to cope with quite low growth.'
With China as the catalyst for economic activity in the region, the future looks bright, particularly as intra-regional trade now accounts for 40 per cent of total trade. He believes the flow of liquidity back to Asia is only just beginning - and in the next two to three years investors will begin to see that the prospects for growth are better here and companies undervalued.
Mr Bunker says in the past he has been accused of being too conservative, but he sticks to his guns about evaluating companies thoroughly with a view to long-term growth. He also has money in his own fund.
'The key factor has always been management - I have not found a good company that has not been well managed,' he says. 'We generally find that good businesses and good managers give you good balance sheets. We like companies that are strong on financials.
'We try to look a little bit further ahead than most other investors and are not going to be overly influenced by greed and fear.'
For him, fear presents a time to buy good companies that are undervalued - such as after the Asian crisis and the Sars outbreak earlier this year. Periods of greed, on the other hand, are dangerous because good companies become overvalued along with second- and third-liners benefiting from a rush of liquidity. Times like the dotcom boom, periods of overheated property markets and even surges in China stocks have sounded alarm bells for him in the past.
After 10 years of largely steering clear of Japan, Mr Bunker has begun to see a 'sea change' in the world's second-largest economy. He expects the fund's 'dramatically underweight' position to creep up towards 45-50 per cent as good opportunities are identified.
. 'We think this is the beginning of a major new trend,' he says. 'In spite of a lack of genuine reform from within the government we are starting to see a genuine focus from Japanese industries on restructuring in a way that is beneficial to shareholders. There is a focus on not just trying to generate sales but generating much higher levels of profitability in underlying businesses. They are concentrating on industries that make money.'
He is keeping his eye out for domestic businesses that have been restructured, and holds names like trading house Mitsubishi Corp as well as blue chips such as Canon and Ricoh that did well in the 1990s.
He prefers to access the China market via companies listed in Hong Kong, as these companies most often match his stringent management and profit requirements. His largest single investment in the mainland is oil major CNOOC. 'One thing we tell investors is that China is increasingly becoming a popular concept - the flows of money into that concept mean you get much greater distortion from fundamental value. We have seen it in the past and we don't want investors to lose touch with the sort of returns that they can expect over a long period,' he warns. 'There are lots of investments which are either corrupt or have no prospect of generating proper returns. It has to be a fundamental selective approach if you are going to make money over a long period of time.'
Resources and commodities companies are one way Mr Bunker aims to participate in China's manufacturing story - with companies such as CNOOC set to benefit from climbing energy requirements, and Australian mining company Rio Tinto enjoying strong demand for iron ore.
Since inception in 1983, the fund has risen 10.98 per cent per year, against a 6.85 per cent rise in the benchmark MSCI Pacific Index. Over five years it is up 5.6 per cent a year against a 0.43 per cent dip in the benchmark. For the year to the end of June it had risen 6.23 per cent, against the benchmark's 6.29 per cent gain.
PROFILE
1979-1984: Worked for J. Rothschild Investment in London after completing London Stock Exchange exams
1984-1985: Moved to Hong Kong, worked for J. Rothschild Charterhouse Management
1985: Started GAM Hong Kong operation
1987: Moved to GAM in Britain
2001: Became chief investment officer of GAM's Pacific team