Allianz RCM’s Michael Konstantinov has closed energy and commodity underweights as a result of rising prices.
The manager of £840m Bric Stars fund says the economic recovery is increasing demand for raw materials, leading to price rises.
“A stronger than predicted recovery in developed markets is pushing up oil and commodity prices,” he says.
“We are not super bullish, but the data coming out is positive so we have decided to close these underweight positions.”
The manager has instituted holdings in Tata Steel, as well as Indian metals and mining company Sterlite Industries, by trimming his holding in Infosys.
“We had a very high overweight to Infosys and it has performed very well. From a valuation point of view, it is now fairly priced so we took it down from 4.5% to 3%,” he says.
Konstantinov also added to existing positions in Rosneft and Novatek, while Petrobras, Gazprom and Vale remain some of the fund’s biggest holdings.
Within the China part of the portfolio, the manager has started a position in China Construction Bank and increased his holding in China Life.
“We took profits on a number of names and redeployed the money in financials names,” he says.
“Although there is concern about the government ordering capital increases for banks, this is precautionary move, rather than because they have incurred huge losses.
“The dynamics are quite positive, loan growth is growing and non-performing loans are not increasing too much.
“Chinese banking stocks are really cheap at the moment, and for the next 12 months, we see this as a really interesting opportunity,” he adds.
This year, Konstantinov has also introduced a 2% position in Sony because it its potential sales growth in the BRIC nations.
“In terms of consumer electronics, we believe Sony will become a more important player in these countries,” he says.
“We are seeing a shift towards more branded products and we think this will accelerate over the coming years.”
