Matthew Spencer, head of UK retail at Orbis Investments, discusses why there is value in the UK, Taiwan and South Korean markets. He also reviews some of the firm’s funds, and outlines his top stock picks.

“We find a lot of investment opportunities on the UK market. Firms are cheap and undervalued due to the negative sentiment,” Matthew Spencer, head of UK retail at Orbis Investments, told this new service in an interview.

“We have increased our exposure to the UK market recently. We added to Experian, a UK-headquartered data and tech company,” Spencer said. “Another area is construction with investments in Balfour Beatty, the UK’s largest construction and infrastructure provider. We are still invested in Rolls Royce. We have been invested in defence like BAE Systems but trimmed that recently.”

“We have added to oil names like UK-listed energy firm Shell and Serica Energy. We are supportive of the move towards green energy but firms are still expensive and fossil fuels are still needed. We think natural gas is a good transition, and Shell has clearly tapped into that,” Spencer continued.

However, he emphasised opportunities in the energy transition, notably in upgrading the infrastructure. He drew attention to the role of cables, for instance, with 90 per cent of cable manufacturers located in Europe. He invests in the cable manufacturer the Prysmian Group.

Spencer is overweight in the UK, Taiwan and South Korean markets, and very underweight in the US as it is expensive, although some of the funds have heavy exposure there. He is invested in US tech firm QXO, for instance, which primarily deals with the manufacturing, distribution and service sectors.

He also sees opportunities in biotech and healthcare, an area of neglected opportunity, and is invested in Danish biotech firm Genmab which develops antibody-based products for the treatment of cancer and other diseases. “We have moved away from the US towards the UK and emerging markets,” Spencer said. He has little exposure to Europe.

In line with a number of wealth managers, he likes tech firms in South Korea and Taiwan. Korea is big on semiconductors, he said, and he has investments in South Korean-based Samsung Electronics. It is the largest global producer of DRAM chips which has benefited from the price increase of DRAM and NAND flash memory chips – driven by demand for generative AI. He is also invested in South Korean chip maker SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC). “We also like Brazil and have invested in a few firms there. We like Chinese tech multinational Tencent too. We are massively underweight in India,” Spencer said. “Our emerging market fund has done very well, outperforming the index over a five-year period,” he added.

Orbis SICAV Emerging Markets Equity Fund
The fund is actively managed and seeks higher returns than the average of the equity markets of the world’s emerging market countries, without greater risk of loss. Currency exposure is managed relative to that of the MSCI Emerging Markets Index. Reporting for the class is in UK sterling and the reporting benchmark is the MSCI Emerging Markets Index, including income, net of withholding taxes translated into UK pounds. The firm uses a contrarian approach to buying good firms that are out of favour

Top five holdings include Asia-focused investment company Jardine Matheson Holdings, Taiwan Semiconductor Manufacturing Company, Wise Financials, Kiwoom Securities Financials and Chinese internet tech giant NetEase. Top countries include China/Hong Kong, Korea and Taiwan.

Despite the conflict in the Middle East, a number of wealth managers have been increasing their exposure to emerging markets, which have been outperforming developed countries. For example, Edmund Shing at BNP Paribas Wealth Management argues the case for emerging markets.