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Market decline a buy signal

DESPITE recent declines in global stock markets, managers at Legg Mason affiliate Royce & Associates believe it might be the right time to expand portfolios holdings, with the US small-cap space looking particularly attractive.

"The indiscriminate selling is allowing us to re-enter some of our favorite names at very attractive absolute valuations," said William Hench, Portfolio Manager at Royce & Associates.

Royce & Associates is wholly owned by Baltimore-headquartered Legg Mason, which managed US$663 billion by the end of June, serving clients in 180 countries.

While market declines are causing short-term pain to a lot of investors, such corrections present a strong opportunity for stock picking, especially for longer-term investors, according to Hench.

Royce & Associates has been adding to their existing holdings and especially in what they deem to be turnaround sectors where price-to-book and price-to-sales valuations are most attractive.

Technology plays among US small-caps, such as those who produce and sell capacitors and basic chips, would be the most ideal investments since they would have very limited impacts from macro concerns like a new round of quantitative easing policies, Hench added.



 

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