* Sees further growth of Russian stocks despite rally
* Recommends focusing on midcaps in oil, gas, commodities
* Sees Polish financials as overpriced
By Chris Borowski
WARSAW, Sept 16 (Reuters) - Russian mid-caps, especially
those related to oil and gas production and commodities, present
solid investment opportunities even after their rally so far
this year, said a portfolio manager at Czech bank Ceska
Sporitelna.
"Russia has the largest number of undervalued companies and
it may be going through a re-rating with analysts increasing
their growth forecasts," Jiri Lengal, who runs one of the bank's
funds Prague-based ISCS Sporotrend, told Reuters on Wednesday.
"Russian stocks still have descent room to grow, especially
if commodity prices continue to strengthen."
Lengal's $278 million fund has posted 125 percent growth so
far this year, better than any other fund focusing on emerging
Europe stocks, according to Lipper data.
Among ISCS Sporotrend's main holdings as of June 30 are
Uralkali <URKA.MM>, Gazprom <GAZP.MM> and Raspadskaya <RASP.MM>
in Russia, which makes up about 40 percent of the fund, and
Kazmunaigas <RDGZ.KZ> in Kazakhstan, where it has 8 percent.
The main industries in which it invests are financials (33
pct), oil and gas (23.7 pct) and basic resources (19.8 pct).
Lengal said he has also bet on several "junior" companies,
or up-and-coming small and midcaps in the oil, gas and metals
sectors in Russia and former Soviet republics.
"These have either decent reserves in the 2P category
(proven plus probable) with development work to be done to
monetise them or have substantial exploration portfolios," he
said.
One such company among ISCS Sporotrend's top 10 holdings is
Ukrainian Regal Petroleum <RPT.L>.
Moscow's most liquid stock exchange, the MICEX <>, has
gained nearly 90 percent so far in 2009, erasing a large chunk
of the previous year's losses thanks in large part to recovering
commodity-related stocks.
Lengal's portfolio, which shed two-thirds of its value in
2008, also benefitted from strong performance of Turkish
financials earlier in the year, although the fund has been
reducing its position of Turkish stocks of late.
But Lengel has kept a low exposure to Warsaw listed
companies, especially heavyweight banks, which have historically
traded at a premium to other regional stocks.
"For the time being we think Polish financials are
overprices, both in absolute terms and relative to their
regional peers," he said.
Some Polish banks, such as UniCredit's <CRDI.MI> arm Pekao
<BAPE.WA> even trade at a hefty premium to their foreign
parents, he added.
Lendel also does not expect a significant correction on the
equity markets in the coming months.
"I am not a believer of the 'W' scenerio. I expect more of a
'V' shaped recovery," he said.
(Editing by Jon Loades-Carter)
