One on One with Kim Goodwin, Head of Equities at Credit Suisse Asset Management
Tuesday, June 05, 2007
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SUSIE GHARIB: Our guest tonight says the best place to invest these days is in international, not U.S stocks. She's Kim Goodwin, head of equities at Credit Suisse Asset Management. Hi, Kim and welcome to NIGHTLY BUSINESS REPORT.
KIM GOODWIN, HEAD OF EQUITIES, CREDIT SUISSE ASSET MGMT.: Hi Susie. Thank you.
GHARIB: Let me begin by asking you why did you find international stocks more attractive than U.S. stocks? What's your analysis there?
GOODWIN: Well you know Susie, I think that the analysis that we got, the comments that we get today from Fed chief Bernanke really do support my thesis. The U.S. stock market has been up 20 percent in the last 12 months. I just don't see the catalyst that's going to drive it higher, especially if we're not going to see a Fed rate cut.
GHARIB: And what makes the international markets more attractive?
GOODWIN: We're somewhat selective in the international market and I would say that U.S. investors don't have to go very far for greater opportunities. I would be insisting that U.S. investors take a good look at Latin American markets.
GHARIB: Before we get to that, let me ask you what would have to happen in the U.S. markets for you to become interested in telling your clients to invest in U.S. stocks?
GOODWIN: I think the U.S. market has appreciated so much that I would really need to see a 5 to 10 percent correction to order to see where the upside is going to be over the next 12 months. I mean as we said, the U.S. economy is relatively strong, but markets are leading indicator and they already reflect that economic strength.
GHARIB: All right, so let's look around the world You said you like Latin America, why is that?
GOODWIN: Well for example, in Brazil, falling really interest rates are really benefiting both their stock market and their economy. And if you take look at Mexico, even though I think that market is somewhat fairly valued, there is definitely some opportunities in Mexico in certain sectors. So there are a number of companies that we like there.
GHARIB: Can you mention a few stocks?
GOODWIN: Sure, I'd be happy to. Petrobras for example, which is the largest oil and gas company in Brazil is a name that's under performed simply because energy prices have been a bit weak and that's a name that we've be adding to on weakness. CVRD is another Latin American Company. It's one of the top three iron and ore producers in Latin America and they're expanding into other markets. And finally, American Mobilis (ph) which is a Mexican communications company is a name that's expanding into Latin America. So those are three names that we would be looking at and encouraging investors to take a look at.
GHARIB: And these are ADRs. You can buy these here in the states.
GOODWIN: Yes or we have a Latin America fund, so we can definitely purchase these.
GHARIB: And do you own for disclosure purposes, do you own any of these or does Credit Suisse have any relationship, investment banking relationship with them?
GOODWIN: I do not own them. We do not have the banking relationship.
GHARIB: OK, aside from Latin America, where else around the globe do you find that are interesting from an investment point of view?
GOODWIN: I have to be a little bit more selective in Europe because I'm a bit concerned about higher inflation. You're seeing a bit of noise there, so I'm paying attention to higher commodity prices and I'm also watching the fact that the European central bank may be raising interest rates a bit or maybe raising their target as early as tomorrow so Germany is not a market that I'm as enthusiastic about. But in Europe, some of the financial services companies that are undervalued that are still benefiting from the huge trend towards mergers and acquisitions, those are companies that your investors can take a look at.
GHARIB: What's your China? We've a lot of interest here in investing in the Chinese economy, the Chinese stock market. What's your view on China?
GOODWIN: I'd stay on the sidelines. If you're already in China, I think it's a little too late to get out because for the month of May, Chinese equity funds saw outflows every single week. Plus, we've already seen the 15 percent correction in the A shares. Some of our portfolios are as high as 30 percent cash in terms of China. But the reason you can't count China out is that that stock market is only really maybe 30 percent of the economy so it's much more driven by exports and fixed income, so I don't see any sort of global meltdown as a result of volatility in the Chinese market. So it's one that I'd say, if I had to rate it, I'd put a hold on China right now.
GHARIB: All right Kim, thank you, lots of good information. We really appreciate it.
GOODWIN: Thank you Susie. Thank you for having me.
GHARIB: My guest tonight, Kim Goodwin, head of equities at Credit Suisse Asset Management.
