Baring Bullish On Volatility

Aug 7 2008 | 1:44pm ET

The recent market sell-off and volatility has created a number of good buying opportunities for investors both on the long and short side of the book with rmerging markets, in particular, offering the most attractive prospects.
According to Paul Graham, head of alternative business at Baring Asset Management, the commodities boom continues to show no sign of abating and market inefficiencies are creating opportunities for long/short investors.

“As the pool of available alpha in developed markets continues to diminish, investors are increasingly looking both to emerging markets and attractive alternative areas within developed markets,” said Graham. “Shorting is no longer just a means of risk reduction but a rich potential source of alpha. We believe that emerging markets in Asia and the EMEA regions currently offer attractive prospects, as do emerging commodities-related areas such as agriculture.”

On the short side, Graham said the firm is taking positions in selected companies in sectors such as mining. The firm has identified investment opportunities in frontier markets such as the Middle East and North Africa. In Asia, Barings identifies Japan as a market that could surprise on the upside. “Following over two years where Japan was one of the world’s worst performing stock markets, Japan is now one of the best performing markets year-to-date and offers rich investment potential on the long and short side,” said Graham.

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