Bloomberg News

‘CASSH’ Nations Offer Value on Crisis, BlackRock Says

November 09, 2011

(Corrects spelling of name in second and third paragraphs.)

Nov. 9 (Bloomberg) -- Investors should buy stocks in the five developed nations whose equity markets have slumped even though they have less debt and faster economic growth than their neighbors, according to BlackRock Inc.’s iShares unit.

Benchmark measures in Canada, Australia, Switzerland, Singapore and Hong Kong have dropped 10 percent on average in local currencies this year even though they “generally have much better financial situations,” said Russ Koesterich, global chief investment officer for iShares, the world’s largest provider of exchange-traded funds.

“We call them the CASSH countries,” San Francisco-based Koesterich said in an interview in London. “These are countries that are overlooked, but offer very stable developed economies with less baggage. There is a perception that all developed markets are in a slow-growth, debt-burden purgatory, but it is not the case.”

The MSCI World Index, measured in dollars, has fallen 7.2 percent this year as European nations from Greece to Portugal were bailed out while concern grew that the U.S. and Chinese economies will slow more than economists had predicted. While the countries with the weakest finances have led the losses, the five CASSH markets have also underperformed the global index.

“They are an alternative to investors seeking international exposure but are concerned with what they see in the U.S., Europe and Japan,” the manager said.

European and the U.S. stocks slumped today after the spread between Italian and German bond yields widened to the most since the introduction of the euro and LCH.Clearnet Group Ltd. increased the deposit it demands from clients to trade Italian government bonds and index-linked securities.

BlackRock oversees $3.3 trillion.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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