Thomas Naughton

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  www.kfsm.com/Global/Story.asp?S=9092582 - [Cached Version]
  Published on: 9/30/2008    Last Visited: 9/30/2008  

  "When the Asian central banks and securities regulators heard that the U.S. had banned short-selling, they couldn't believe their luck," says Thomas Naughton, chief investment officer for equities at PMA Investment Advisors in Hong Kong.

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  www.sparxgroup.com/go.cfm/082F90BC-FF1D-8AF3-F98CC2972F - [Cached Version]
  Published on: 8/28/2008    Last Visited: 9/15/2008  

  Tom Naughton
  
  Can China survive the Olympics?The staging of the Summer Games was devoid of any major snafus and introduced the world to a hyper-modernized Beijing.But the fate of post-Olympics China seems to be on the minds of many investors these days with the markets in both Hong Kong and Shanghai down sharply so far this year.The massive makeover of Beijing leading up to the games cost an estimated $35 billion, but the capital city is unlikely to benefit from such largesse now that the Olympic torch is extinguished.However, China experts say that's just a small part of the country's overall growth picture—especially when it comes to infrastructure related spending.In fact, the conclusion of games may actually be more of a blessing than a curse insofar as it encourages the Chinese government to refocus on the broader economy's needs, says Tom Naughton, Chief Investment Officer for equity at PMA Investment Advisors Limited, part of SPARX Group.
  
  While Beijing is the capital of China and in many ways its showcase city—the Chinese voted it their "most beautiful city" in a poll last year—it's just a tiny part of the overall economy.Indeed, Beijing accounts for only 4% of the total gross domestic product in China, far below the levels for other Pacific hosts of Olympic games such as Sydney in 2000 (24.5% of Australia's GDP), Seoul in 1988 (27.7% of South Korea's GDP) and Tokyo in 1964 (26.3% of Japan's GDP).And while Beijing has more than 10 million people, that amounts to just 1.1% of China's total population."We expect the Olympics to have added just an extra 20 basis points to the Chinese GDP," says Hong Kong-based Naughton.
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  "China has held off on doing a lot because of the Olympics," says Naughton.
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  Both of those bleak scenarios would be detrimental to the Chinese economy—and equity prices--but Naughton of PMA thinks it is unlikely either one will come to pass, at least in the near term.
  
  The good news is that lower global commodity prices—which some credit to slowing demand from China—are a boon to Chinese importers.At the same time, inflation rates seem to be coming down from highs earlier this year, thanks to a profusion of pork bellies."A large part of the country's inflation was driven by a single problem: a shortage of pork," says Naughton.
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  The new thinking, says Naughton, is: "Why should the bottom 20% of exporters take up vital resources?"
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  If growth rates stay in a stable range for China this year—say 8%-10%--and global commodities prices remain in check, Naughton believes money will come back into Chinese asset markets sooner or later.

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  asiainvestmentintelligence.com/go.cfm/B8F0CB3B-C09F-066 - [Cached Version]
  Published on: 4/22/2007    Last Visited: 4/22/2007  

  Thomas Naughton - Chief Investment Officer for Equity, PMA Investment Advisors Ltd.
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  Thomas Naughton
  
  Chief Investment Officer for Equity, PMA Investment Advisors Ltd.
  
  Tom Naughton is Chief Investment Officer in charge of equity strategy at PMA Investment Advisors Ltd., a Hong Kong-based institutional asset management firm and wholly-owned unit of the SPARX Group Co.Ltd.Prior to joining PMA, Tom worked for Universities Superannuation Scheme (USS) Ltd., the U.K.'s second largest private pension fund.He has been a portfolio manager since 1995 and focuses exclusively on Asia ex-Japan.Tom graduated from University College London with a B.Sc. (Hons) in mathematics and economics and is an associate member of the U.K. Society of Investment Professionals.

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  www.asiainvestmentintelligence.com/go.cfm/11B34785-FF1D - [Cached Version]
  Published on: 5/22/2008    Last Visited: 7/25/2008  

  Tom Naughton
  
  Tom Naughton, Chief Investment Officer in charge of equity strategy at PMA Investment Advisors Ltd., a Hong Kong-based asset management firm and part of SPARX Group, discusses the often misconstrued notion of decoupling between the U.S. and Asian markets...
  
  There has been much written about U.S. and Asian market "decoupling" over the past several years.

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  www.sparxgroup.com/go.cfm/61FB8E31-FF1D-8AF3-F9D18F9B6E - [Cached Version]
  Published on: 2/28/2008    Last Visited: 5/16/2008  

  Tom Naughton
  
  Slumping stock prices.
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  Asian corporates and financials seem to have learned their lessons and, as a result, are in much better shape than many of their counterparts in Europe and the U.S. "It's a mirror image of 10 years ago when Asia had the stressed balance sheets and rest of the world was healthy," says Tom Naughton, Chief Investment Officer of PMA Investment Advisors, Ltd., part of the SPARX Group."Because of the [late 1990s] crisis most Asian banks now operate very conservatively."
  
  Banks in Asia once had a reputation for being all too willing to finance bloated, debt-ridden conglomerates with lots of high level connections but poor cash flow and low return-on-equity.Fast forward to today and the picture has improved dramatically.Asia Inc.'s net debt-to-equity ratios are half the levels of a decade ago and surplus free cash flow is the norm rather than the exception.On the other side of the ledger, Naughton notes most Asia ex-Japan banks' loan deposit ratios,a measure of loans divided by deposits--are well below 100%, according to data from PMA and UBS Securities Asia Ltd.Average loan-to-deposit ratios have dropped from a high of 106% in 1997 to 77% last year (see chart).
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  "There's almost no securitization and very little sub-prime mortgage exposure," says Naughton.
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  Even so, the danger of a property bubble forming still seems remote as debt financing remains at historically low levels, says Naughton, who notes prices still remain below peaks levels prior to the Asia crisis.Moreover, the pool of buyers has expanded as more and more mainland Chinese enter the Hong Kong market to diversify their asset base.Says Naughton: "In Hong Kong, we have an environment of very, very low leverage, still very low property prices and very low interest rates."

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  www.sparxgroup.com/go.cfm/B103E1D1-FFC5-9518-98026EDDD9 - [Cached Version]
  Published on: 12/6/2007    Last Visited: 12/7/2007  

  "The perception about Asian markets is often different than the reality," says Tom Naughton, Chief Investment Officer of PMA Investment Advisors Limited, part of the SPARX Group.
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  Similarly, free cash flows,essentially net income after capital expenditures and depreciation,have improved drastically since 2000 (see chart.) "Companies in Asia these days are no longer binge spenders," says Naughton.
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  Indeed, Naughton notes more and more cash is being distributed to stockholders in the form of higher dividends and share buyback programs.
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  "The universe of Fortune 500-type companies is deeper and wider than ever before," says Naughton, adding that it opens up more potential in the large-cap space for value-seeking investors.
  
  To be sure, it's getting harder to find overlooked Asian equities, at least when it comes to discounted valuations.A recent report from Citigroup noted that stocks on Asia markets still trade at a discount to other regions on a price-to-book basis, but by the narrowest margin since 1998.Some analysts say Asian markets may be due for a correction.But at the same time, a number of factors indicate that the overall momentum could stay bullish for Asia ex-Japan equity.Naughton, for one, ticks off a list of other misperceptions about Asia that make him optimistic about the mid-to-long term outlook for the region's markets.First, Asian government pension funds still are not big players in their own countries' equity markets,although that is expected to change soon.Also, Naughton says Asian economies have not historically had strong correlation to the U.S. economy, so any downturn in the American economy won't necessarily derail growth in Asia.

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  www.asiainvestmentintelligence.com/go.cfm/FF89DBE6-FFC5 - [Cached Version]
  Published on: 9/13/2007    Last Visited: 1/31/2008  

  Tom Naughton
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  "Growth in Asia is accelerating organically, so we expect the U.S. market to have even less impact on Asian markets in the future," says Thomas Naughton, Chief Investment Officer for Equity at PMA Investment Advisors Ltd. in Hong Kong.
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  "Asian companies' balance sheets are completely different today from a few years ago," says Naughton of PMA, part of SPARX Group.
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  Even more critical, says Naughton, is vetting actual earnings growth,as opposed to forecast earnings."We have found that a strategy that focuses on high earnings growth forecasts tends to underperform because companies are always too optimistic," he says."People too easily forget that [regional or country-specific] cyclical factors can affect performance."
  
  Staying on the lookout for such bumps in the road can be particularly significant in Asia because barriers to entry are so low in many fast-growing industries.With few brand names and lots of commodity-type products,from chemicals and coiled steel to DVD players and laptop computers,periods of dire shortages followed by massive over-supply are endemic for many businesses."Almost anyone can start up this kind of company, which is why competition is so rife," notes Naughton.

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  www.sparxgroup.com/go.cfm/FF89DBE6-FFC5-9518-9890639932 - [Cached Version]
  Published on: 9/13/2007    Last Visited: 12/7/2007  

  "Growth in Asia is accelerating organically, so we expect the U.S. market to have even less impact on Asian markets in the future," says Thomas Naughton, Chief Investment Officer for Equity at PMA Investment Advisors Ltd. in Hong Kong.
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  "Asian companies' balance sheets are completely different today from a few years ago," says Naughton of PMA, part of SPARX Group.
  ...
  Even more critical, says Naughton, is vetting actual earnings growth,as opposed to forecast earnings."We have found that a strategy that focuses on high earnings growth forecasts tends to underperform because companies are always too optimistic," he says."People too easily forget that [regional or country-specific] cyclical factors can affect performance."
  
  Staying on the lookout for such bumps in the road can be particularly significant in Asia because barriers to entry are so low in many fast-growing industries.With few brand names and lots of commodity-type products,from chemicals and coiled steel to DVD players and laptop computers,periods of dire shortages followed by massive over-supply are endemic for many businesses."Almost anyone can start up this kind of company, which is why competition is so rife," notes Naughton.

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  www.sparxgroup.com/go.cfm/4504EAB2-FFC5-9518-98E85ADAE0 - [Cached Version]
  Published on: 10/12/2006    Last Visited: 12/7/2007  

  Thomas Naughton, Chief Investment Officer for Equity at PMA Investment Advisors Ltd. in Hong Kong, says that could result in lower levels of correlation with other major markets--such as the U.S.--over the long-term ...

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  biz.yahoo.com/prnews/070904/nytu026.html?.v=101 - [Cached Version]
  Published on: 9/4/2007    Last Visited: 9/4/2007  

  "Being based locally allows us to better access senior management at the companies which we research and decide to invest in-or not to invest in," says veteran Asia ex-Japan equity portfolio manager Thomas Naughton, who manages the SPARX Asia-Pacific Opportunities Fund and SPARX Asia-Pacific Equity Income Fund.

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