Scots Euro system problems Levante Manager for more security holdings since '08

As the Irish government signed a rescue package to avoid a default last month, Haig Bathgate in Scotland charged in equities.

The chief investment officer at Turcan Connell took the proportion of 650 million pounds the Edinburgh-based company (U.S. $ 1 billion) of assets it invests for clients to about 65 percent of the stock, the highest since mid-2008. The sovereign debt crises of Ireland and Greece are masking a boom of growth "in other places, Bathgate, said in an interview.

"We are more optimistic than at any other time in the recent past," Bathgate said in his office in the Scottish capital on 13 December. "You feel like you're bipolar at the time, going from one extreme to another."

Turcan Connell conviction about the prospects of stocks in contrast to the largest money managers in the Scottish capital. Standard Life Investments, which oversees 154 billion pounds, is neutral on the markets of most equity and preferred to benefit from improved earnings of the company worldwide by holding corporate bonds, a market described Bathgate as a "bubble."

His reasoning is that the U.S. Federal Reserve will keep stimulating the economy, while borrowing costs will remain lower than previously expected, helping countries like Germany, Bathgate said. Ireland was always going to be rescued by the European Union and the International Monetary Fund after he did the same with Greece in May, said.

"There was an overreaction to Europe," said Bathgate, 33. "We are at risk at the stage now."

Credit Market

The euro fell against the dollar today after Moody's Investors Service said the rating is Spain's debt on review for possible downgrade. The euro fell 0.6 percent to $ 1.3320 by 10:19 am in London.

The MSCI World Index of shares fell 2.4 percent in November, the first decline in three months, as escalating concern about Ireland before the government agreed a rescue package worth € 85,000,000,000 ($ 114,500,000,000).

The Barclays Capital added Corporate World index lost 3.5 percent over the same period, its worst month since October 2008. Junk or not investment grade bonds, fell 4.8 percent, according to Barclays Global high-yield index. That was the biggest drop since May, the month Greece managed a rescue.

"There is value in corporate bonds, as accelerating inflation in the United Kingdom becomes permanent, Bathgate said. "I am convinced it will sell soon."

Stock Funds

Turcan Connell, which caters to wealthy families and invests in a wide range of assets, added about 15 million pounds to global equity funds especially during the last week of November as prices fell, Bathgate said. It buys the funds rather than investing directly in companies, and put money in return for Schroder Asia Total Fund said Bathgate.

"You're in an environment that has to change his mind very quickly," Bathgate said.

In addition, the company invested in a basket of a dozen emerging market currencies ranging from the Mexican peso to the South Korean won with a bet equal to the decline of the British pound and the dollar, he said.

In Greece deal with a debt crisis, Bathgate said in March that the pound could fall by more than 20 percent against the dollar should Britain next stage of the crisis that the country sold record amounts of debt. Since then, the UK has changed the government and pledged budget cuts. The pound has risen 5.2 percent against the U.S. currency from 1 March. This was mainly as the Bank of England continued its purchases of bonds, a process known as quantitative easing, Bathgate said.

Performance Ranking

CF TC Balanced Portfolio, a mutual fund £ 21 million reflecting investment in general Turcan Connell has increased 35.8 percent from Bathgate took over in January 2009, according to figures from the Chicago-based research firm Morningstar Inc. The fund ranks 90 out of 270 peers, with the average increase of 33.6 percent, according to the data.

In July, Turcan Connell took money from hedge funds and added 5 percent of their money in equities by buying funds, including the Sarasin International Equity Fund and Special Situations Fund BlackRock, Bathgate said.

The impact of Greece and Spain in the rates and the euro has been beneficial for other parts of Europe, he said.

Economists expect the European Central Bank to start raising the cost of borrowing in the fourth quarter of 2011, a year later than predicted in 2009, according to forecasts compiled by us. The euro has fallen 6.6 percent against the dollar this year, helping exporters.

The German economy will expand 3.7 percent this year, the governing council of economic advisers forecast in November, the fastest growth since 1991.

"The size-fits-all euro area is working in Germany at the moment," Bathgate said.