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Five money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info545.htm

TWST: What is the macro look for the area that you are specializing in, which is Asia Pacific?

Mr. Muromcew: With the exception of Japan, it’s definitely getting much better. Most of the Asian economies are starting to recover, in many cases from a lingering hangover from 1997/1998, and they certainly are very strong beneficiaries of a pickup in the global economy, whether it’s South Korea, or the Philippines, or Indonesia, all of which were great performers in the fourth quarter and the first quarter of this year. What is driving this? One, restructuring — especially in Korea. Two, financial deleveraging (the contrast to Asia’s deleveraging is the deterioration in US corporate balance sheets!). Third, as a result of the prior two, is a strong improvement in ROE (return on equity) in the region. Australia is actually in a different part of the economic cycle, so I think a lot of the easy money has been made there. They’re just about to raise interest rates and will probably be leading in terms of raising interest rates as their economy really picks up a full head of steam. Japan is the one outlier, and they just have numerous domestic problems, such as a weak banking system and a hollowing out manufacturing sector, that the politicians and bureaucrats seem unable or unwilling to address.

TWST: Could you discuss some Japanese companies that you expect to show continued growth?

Mr. Muromcew: The first is a firm called Nitto Denko. This is a chemicals and adhesives company, and the real growth area for them is that they make color films that are integral in making liquid crystal displays, LCDs. So they’re very much an upstream supplier for the LCD makers in Japan, in Korea and Taiwan, and they see very little pricing pressure on their products, so it’s basically a volume game. As more and more liquid crystal displays are produced and used, they benefit, so they have a very good growth profile.

TWST: How do you play the vast China market? Do you focus on Hong Kong companies or do you invest in actual companies in mainland China?

Mr. Muromcew: We focus on companies listed on the Hong Kong Stock Exchange, and there are two types of China plays there. The first is the traditional Hong Kong company that is actively involved in mainland China. The second are Chinese companies listed in Hong Kong. We do not invest in companies listed in Shenzhen or Shanghai for two reasons: one, liquidity tends to be very limited; and two, we’re still not comfortable with disclosure or corporate governance or securities regulation in the local Chinese market. I will say that the quality of most of the Chinese companies listed in Hong Kong is not very good, so it is a very small investable universe of quality growth companies there. Investing in China to take advantage of the growth is difficult, because even though you have wonderful top-line macroeconomic data (that is of questionable value), it still can be very difficult for somebody investing in listed equities to participate in that growth and in that upside. The best way we have found to do that is with a utility called Huaneng Power (NYSE:HNP). It’s a firm that sells at about 10 times forward p/e with 15% earnings growth. It gives you a 5% yield and has a very good growth profile both through organic growth, as in building new power plants, and acquisition of state-run assets. The state-run power corporation is being broken up, and firms like Huaneng Power are going to be big beneficiaries of that move.

This special Investing Strategies Report includes:

1) Alexander L. Muromcew, International Equity Portfolio Manager and a Vice President at Loomis, Sayles & Company, L.P., examines portfolio management strategies in this timely and deeply informative 3,900-word interview from The Wall Street Transcript.

2) Robert L. Lee, Senior Vice President of Sentinel Advisors Company, examines portfolio management strategies in this timely and deeply informative 4,400-word interview from The Wall Street Transcript.

3) Martha Kimball Pomerantz, Investment Principal at Lowry Hill, examines portfolio management strategies in this timely and deeply informative 3,900-word interview from The Wall Street Transcript.

4) Lawrence Auriana, Portfolio co-Manager of Federated Kaufmann Fund, examines portfolio management strategies in this timely and deeply informative 3,700-word interview from The Wall Street Transcript.

5) Paul A. Magnuson, Principal, Senior Research Analyst and Portfolio Manager with NFJ Investment Group, examines portfolio management strategies in this timely and deeply informative 3,500-word interview from The Wall Street Transcript.