Matthew Spencer, head of UK retail at Orbis Investments, discusses why there is value in the UK, Taiwan and South Korean markets. He also reviews some of the firm’s funds, and outlines his top stock picks.
“We find a lot of investment opportunities on the UK market.
Firms are cheap and undervalued due to the negative sentiment,”
Matthew Spencer, head of UK retail at Orbis Investments,
told this new service in an interview.
“We have increased our exposure to the UK market recently. We
added to Experian, a UK-headquartered data and tech company,”
Spencer said. “Another area is construction with investments
in Balfour Beatty, the UK’s largest construction and
infrastructure provider. We are still invested in Rolls Royce. We
have been invested in defence like BAE Systems but trimmed that
recently.”
“We have added to oil names like UK-listed energy firm Shell and
Serica Energy. We are supportive of the move towards green energy
but firms are still expensive and fossil fuels are still needed.
We think natural gas is a good transition, and Shell has clearly
tapped into that,” Spencer continued.
However, he emphasised opportunities in the energy transition,
notably in upgrading the infrastructure. He drew attention to the
role of cables, for instance, with 90 per cent of cable
manufacturers located in Europe. He invests in the cable
manufacturer the Prysmian Group.
Spencer is overweight in the UK, Taiwan and South Korean markets,
and very underweight in the US as it is expensive, although some
of the funds have heavy exposure there. He is invested in US tech
firm QXO, for instance, which primarily deals with the
manufacturing, distribution and service sectors.
He also sees opportunities in biotech and healthcare, an area of
neglected opportunity, and is invested in Danish biotech firm
Genmab which develops antibody-based products for the treatment
of cancer and other diseases. “We have moved away from the US
towards the UK and emerging markets,” Spencer said. He has little
exposure to Europe.
In line with a number of wealth managers, he likes tech firms in
South Korea and Taiwan. Korea is big on semiconductors, he said,
and he has investments in South Korean-based Samsung Electronics.
It is the largest global producer of DRAM chips which has
benefited from the price increase of DRAM and NAND flash memory
chips – driven by demand for generative AI. He is also invested
in South Korean chip maker SK Hynix and Taiwan Semiconductor
Manufacturing Company (TSMC). “We also like Brazil and have
invested in a few firms there. We like Chinese tech multinational
Tencent too. We are massively underweight in India,” Spencer
said. “Our emerging market fund has done very well, outperforming
the index over a five-year period,” he added.
Orbis SICAV Emerging Markets Equity Fund
The fund is actively managed and seeks higher returns than the
average of the equity markets of the world’s emerging market
countries, without greater risk of loss. Currency exposure is
managed relative to that of the MSCI Emerging Markets Index.
Reporting for the class is in UK sterling and the reporting
benchmark is the MSCI Emerging Markets Index, including income,
net of withholding taxes translated into UK pounds. The firm uses
a contrarian approach to buying good firms that are out of favour
Top five holdings include Asia-focused investment company
Jardine Matheson Holdings, Taiwan Semiconductor Manufacturing
Company, Wise Financials, Kiwoom Securities Financials and
Chinese internet tech giant NetEase. Top countries include
China/Hong Kong, Korea and Taiwan.
Despite the conflict in the Middle East, a number of wealth
managers have been increasing their exposure to emerging markets,
which have been outperforming developed countries. For example,
Edmund Shing at BNP
Paribas Wealth Management argues the case
for emerging
markets.