Sarasin picks Gulf States as one of top ten investment themes for 2009

Speaking in Hong Kong this week, Varnholt said:

"I am very confident about the Gulf States. The Dubai bailout was highly welcome and only serves to solidify the fundamental investment case for the Gulf States."

The resilience of the Gulf States according to Varnholt, are due to the following factors:
• They currently offer the cheapest valuations in seven years;
• They are generally well-managed, family-run companies;
• They have solid corporate balance sheets; and
• They are fundamentally attractive because of their resource wealth.

Oil Prices and the Gulf:

"Oil Prices at $30-40 a barrel are not sustainable. I think $80 a barrel is sustainable over the long term, but we probably won't see that in 2009. I expect the price to easily reach $80 or more in 2010," says Burkhard Varnholt, Chief Investment Officer of Bank Sarasin & Co Ltd.

"The recovery in demand will support a price rise, but also supply bottlenecks, due to an inadequate investment in exploration equipment and maintenance, for example. But in the short term, as net exporters of oil and gas, the Gulf States will continue to make money. They are still break-even, even at $35 per barrel. This is not the case in Venezuela or Russia," he adds.

This fundamentally positive stance lay behind the recent launch of the Sarasin GCC Equity Opportunities Fund. The Fund offers exposure to Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates, providing investors with an opportunity to buy into the future prosperity of the region at currently depressed levels.

Summarizing his discussion in two simple words, Burkhard Varnholt said that the most important driver for investment performance in 2009 was asset allocation. He described the current crisis as creating "once-in-a-generation" opportunities for investors, encouraging them to be both open-minded and contrarian.

He also urged investors to scrutinize the long-term sustainability of business models in order to assess risk. In 2008, Sarasin's sustainability screen shielded investors from some of the companies that were hardest hit by the financial crisis, including pure-play investment banks, the automotive and airline industries, and commodity producers. A thematic allocation process, which provided important protection, even if limited, from a globalized, interdependent economy in 2008, should also be adopted in 2009.

Courage, staying power and experience will benefit:

"We are witnessing a unique global policy experiment. It is natural that this will create 'once-in-a-generation' opportunities. But it takes courage, staying power for the longer term, and experience for investors to benefit. Rapid and decisive asset allocation - even if it is painful - is necessary to protect and build investors' wealth in this environment," specifies Burkhard Varnholt, Chief Investment Officer of Bank Sarasin & Co Ltd.

Investments for 2009:

To hedge against the possibility of policy and economic failures, Sarasin recommends investing a 10% portfolio allocation in gold, which may also serve as hedge against the next wave of reflation and the potential devaluation of the US Dollar. Varnholt also outlined 10 investments which he believes will be positive for investors in 2009.

These investments are:

1. Chinese A-shares
2. Gulf States' equities
3. Selected sustainable water companies (i.e. desalination, metering, treatment, irrigation)
4. Rare materials, such as Tantalum and Platinum
5. Wheat, grain, corn and fertilizer companies
6. Norwegian and Swedish Kronas, the Pound Sterling
7. Asian currencies (except the Hong Kong Dollar)
8. Selected convertible bonds
9. Sustainable real estate developers
10. Selected renewable energy companies.