Asante buys Anglo American for first time since crisis

First State Investments’ Jonathan Asante bought into Anglo American for the first time in three years ahead of its purchase of 40% of diamond producer De Beers last week.

News of the $1.5bn deal, which takes Anglo’s total stake in De Beers to 85%, sent the resources firm’s share price 3.5% higher.

Asante, the group’s head of global emerging market equities, now owns the stock in his £1.8bn Global Emerging Markets Leaders fund, and has also added copper miner Antofagasta to his £122m Latin America fund.

However, Asante has ruled out any similar purchases as he believes the vast
majority of emerging market cyclical businesses are too risky to hold.

Instead the fund will retain its defensive stance, with significant underweights to banks, energy and materials, reflecting his view the global deleveraging process still has some way to go.

“The poor-quality companies have suffered from the volatile market conditions within peripheral Europe, with cyclical stocks taken to pieces,” said Asante.

“I have been cautious about adding to cyclicals because they are extremely risky, but with Anglo American trading at the value of its equity book, I felt it was a good time to buy back into the stock.

“Antofagasta has also unjustifiably sold off in recent months despite it being one of the safest cyclical stocks around, as the majority of its business is made up of copper, which is arguably the safest commodity.”

He added the sell-off in EM currencies was justified, with the Brazilian real in particular ‘horribly’ overvalued.

However, emerging market stocks on the whole remain a lot more expensive than during the aftermath of the credit crisis, said Asante.

“The sell-off has sent stocks cheaper but they are not at the bargain levels they were in 2008. In fact, on the whole, they are twice as expensive on price-to-earnings ratios, which demonstrates the European woes have not had a huge impact on the market,” he said.